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'§TrmME-T — 

CS Historical Papor 

No. — 51 

Volume I of IV 



(Tine or mphu 



1946 - 1955 


Date published: April 1969 Controlled by . SO Division 

Copy #2 of 2 copies prepared . April 1967 

Written by , Alfred T. Cox 


1. This historical paper it a permanent part of the Clandestine Services 
History, and may not be destroyed. 

2. It it included in the “ Catalog of CS Histories" maintained by the 
Clandestine Services Group of the Historical Staff (HS/CSG), O/DCI. 

3. If this document is moved from the office of control appearing on 
the front of this cover, the DD/P Representative, Historical Staff, 
O/DCI, should be Immediately notified of the new office of control. 



C R E T 

CS Historical Paper 
No. '87 



1946 - 1955 

Copy No. 1 of 2: SOD Controlled by : SO Division 

Date written : April 1967 

Copy, No. 2 of 2: DDP Date published: May 1969 

Written by : Alfred T. Cox 

E T 


S EX ret 

Volume I 



Preface i 



1946 3 


1949 . . 10 

NSC 34/2 10 

I ~ " ~~~ I 17 


Propaganda 60 

The Korean War * 78 

Other 89 



Volume II 



Management, Legal, Fiscal and Accounting 1 
Aspects ...... 

Cl A/ GAT Field Accounting ... 70 

Security ....... 81 

Communications . . . . . . , 95 

Establishment of the 

in CAT - 1954 . . L ■ - r~r— 1 102 


Value of CAT as an Operational Asset . . 107 

CAT Support of Agency Requirements. . 107 

Covert Transportation in Support 

of CIA Activities. 107 

Logistical Support of CIA Stations 

in the Far East 110 

CAT as an Instrument of National 

Policy HO 

Other Activities 112 




Volume III 










Note: Reference bibliographies, when used, 

are at the end of each tab. 

Volume IV 


I. INTERVIEW WITH MR.[ ____ ,• .■ • ■ 












1946 - 1955 



The writer of this Historical Paper, Mr. Alfred 
T. Cox, had served with the OSS during World War II in 
both the European and China Theaters. While in China, 
he had become acquainted with Major General Claire L. 
Chennault, whose 14th Air Force flew the training and 
operational missions of the Chinese Commandos, for 
which Cox and his OSS command were responsible. After 
the war Cox maintained occasional contact with 
Chennault, who had remained in China, and, in partner- 
ship with Mr. Whiting Willauer, had established a non- 
scheduled domestic airline, as recounted in the paper. 

Cox was called to duty with the Office of Policy 
Coordination (OPC) in early 1949, at a time when 
Chennault had returned to Washington and was urgently 
pleading with Government leaders for effective assist- 
ance to the Nationalist Government to prevent a complete 
Communist takeover in China. When policy approval was 
given for OPC to explore the possibilities for lending 
such assistance, it was agreed that Cox, under the 
very plausible cover of a special assistant to 
Chennault, particularly for political and military 
affairs, would go to the field 

S Ex; RET 

As he became more and more involved in the ’ 


management of the airline, he was named its vice 
president. Then, when Willauer resigned in 1952, 

Cox was designated president of the airline, a post 
which he held until 1 January 1955, at which time he 
returned to Headquarters. (During the period in which 
he served as president of the airline, Cox did not 
hold any Agency employment status since it was felt 
that it would have been impossible for him to have 
carried out his responsibilities under the restrictions 
of compliance with governmental administrative 
regulations . ) 

It was agreed that Cox could not carry out the 
joint responsibilities of airline president 

and that a senior Agency officer 
should be placed under airline cover to assume the 

responsibilities. This was not 

accomplished until the arrival in the field 

As noted in the paper, Cox has written of the 
events of the period as seen from the viewpoint of the 
man in the field. He has not made any contact with the 

overt airline office in Washington, but he has made 
extensive research of such Agency files that could be 
located. In order to present a complete record, 
therefore, it will be necessary at some point to have 
a parallel paper written, setting forth the story as 
seen from Washington and Headquarters. As Cox has 
noted, differences of opinion will be evident in the 
two papers, but such differences will be factual and 

Mr. Gates Lloyd, who was the Senior DDS officer 

most familiar with the administrative and management 

aspects of the airline, wrote a short paper before 

his retirement, in which he traced the fiscal record 

1 / 

of the airline after the Agency involvement.— It is 
by no means a Historical Paper, but it will probably 
be useful to the writer who undertakes the parallel 
paper noted above. 



I . 

The purpose of this paper is twofold; first to 
recount the history of Civil Air Transport (CAT) , with 
regard to its establishment, commercial operations, 
provision of air support for Agency and other U.S. 
national objectives, and the provision of cover for 
Agency personnel under which they could carry on other 
Agency activities. This is followed by a general dis- 
cussion of the factors that should be considered in the 
establishment of any other similar air support capability. 

This particular paper is written almost entirely 
from the viewpoint of the man in the field. It can be 
truthfully said that there are two versions, at times 
quite divergent, of the history of CAT. There is the 
viewpoint of the man in the field as presented herewith, 
and there is the viewpoint of the man in Headquarters 
who is charged with the administrative details of nego- 
tiating arrangements with CAT management and eventually 
of the purchase of the airline. Although the two stories 
may appear to differ radically, neither is necessarily 
false. Relationships in the field between Agency person- 
nel and CAT management were extraordinarily harmonious 

S E C\R E T 

and cooperative. Relationships at Headquarters between 
Agency personnel and CAT management (Mr . Thomas G. 
Corcoran, Major General Claire L. Chennault, USA (ret.), 
Mr. Whiting Willauer and Mr. James J. Brennan) were 
often strained and bitter with a mutual interchange of 
mistrust and suspicion. 

Certain specific operations or sets of circum- 
stances have been selected for separate treatment as 
annexes to the basic paper. This is because the partic- 
ular series of events described are of a type that can 
rather readily be separated from the main papers, that 
lend themselves ts> the telling of a story with human 
interest beyond the more prosaic recital of a chronology 
of historical events, and because the nature of the 
events described may be such as to require a higher 
security classification than that of the basic paper. 



The story of Chennault and his Plying Tigers 
(American Volunteer Group - AVG) and their support of 
the Chinese Nationalists is very well known and hardly 
requires repeating. It is sufficient to indicate that, 
at the close of World War II, Chennault held an un- 
paralleled position of esteem with Generalissimo and 
Madame Chiang Kai-shek, and in the hearts and minds of 
the Chinese people. Willauer, although not as well 
known publicly, had also been of brilliant service to the 
Chinese Government of World War II. He received his 
B.S. degree from Princeton and his law degree from 
Harvard, and then held a position as a legal advisor 
to the Civil Aeronautics Board in Washington in 1939. 

In 1941 he became a special assistant in the U.S. Depart- 
ment of Justice, and then became a member of the China 
Defense Supplies Corporation (CDS) headed by Doctor 
T.V. Soong. Later, in 1944, Willauer became Director 
of the Far Eastern Branch of the Foreign Economic Admin- 
istration. He and his family became well known in the 

2 / 

Orient from Shanghai to Hong Kong and Tokyo.— 

Chennault and Willauer had become firm friends 
during World War II, and in the fall of 1945 they formed 


a partnership for the purpose of organizing a new air- 

line in China.” Both were convinced that there was an 
urgent requirement for airlift in China because of the 
vast distances and the inadequate communications net- 
works . They estimated that they would require about 
$250,000 of working capital to tide the airline over 
until it could support itself. In the United States 
they were associated with Mr. Corcoran, the famed 
’’Tommy the Cork” of the New Deal era and a senior 
partner in the law firm of Corcoran, Youngman and Rowe 
(now Corcoran, Foley, Youngman and Rowe) . Corcoran was, 
in effect, a silent but potent partner of Chennault and 
Willauer. He was very highly connected, on a first- 
name basis with the most important political leaders, 
and was capable of exerting a very considerable influ- 
ence. These three men formed an extremely formidable 
trio, each one bringing to the partnership abilities 
and skills supplementing those of the others. They 
entered into negotiations with Mr. Robert Prescott, 
president of the Flying Tiger Line (U.S.) and a former 
pilot of distinction with Chennault 's Flying Tigers 
prior to U.S. entry into World War II. It appeared* 

that Prescott and his associates would be willing to 


provide the necessary working capital. - 

Prescott sent his brother, Louis, to China in the 
fall of 1946 to complete the negotiations for the provi- 
sion of the working capital and to act as comptroller 
of the funds when furnished, En route to China, Louis 
was killed by a stray shot meant for someone else while 
quietly reading a newspaper in the lobby of a Manila 
hotel. When he was accidentally murdered, there was no 
one available in the Flying Tiger organization to take 
his place and, therefore, the line backed out of the 
proposed deal. 

This left Chennault and Willauer in desperate 
financial straits. They had obtained an airline fran- 
chise from the Chinese Nationalist Government (ChiNats) 
and had made arrangements for the purchase of surplus 
aircraft in Manila and Honolulu. They estimated that 
they had only enough money left between themselves to 
carry on as they were for about a month and a half 
longer. They turned to Chinese bankers and, after 35 
days of intense negotiations, were able to raise the 
necessary funds. They were greatly assisted in this 
by Doctor Wang Wen-san, a Chinese banker, and Mr. L.K. 

Taylor, a businessman with a long background of ' 


experience in the Orient. - 

The Chinese National Relief and Rehabilitation 
Administration (CNRRA) , the Chinese counterpart of the 
United Nations Relief and Rehabilitation Administration 
(UNRRA) , was in urgent need of an airlift which would 
connect such seaports as Shanghai and Canton to the 
small cities and villages of the interior where consumer 
items were so desperately needed. Although there were 
two other airlines operating in China, the China 
National Aviation Corporation (CNAC) , with 20 percent 
Pan American Airways ownership, and the Central Air 
Transport Corporation (CATC), wholly owned by the 
Chinese Nationalist Government, CNRRA had found by 
experience that these lines could not be relied upon 
for consistent response to their requirements. On 
25 October 1946, CNRRA signed a contract with Chennault 
and Willauer to provide the required airlift by means of 
an airline company to be organized by Chennault and 
Willauer and to be known as CNRRA Air Transport (CAT).* 
As soon as this contract had been signed, negotiations 
were undertaken to obtain surplus cargo C-47 and C-46 
aircraft. Five C-47's were purchased in Manila and 
flown to Shanghai on 27 January 1947. The first offi- 
cial flight for CNRRA from Shanghai to Canton had been 
made on 21 January 1947 in an aircraft that was already 

♦Middle 1948 renamed Civil Air Transport (CAT) . 



S E 

E T 


available. Eighteen C-46's were purchased in Honolulu; 
after they had been ‘'unpickled" and put into flying con- 
dition they were flown to China. The first three of the 

6 / 

eighteen C-46's arrived in Canton on 1 March 1947. ~ 

As rapidly as possible, CAT went into continuous 
operation, carrying relief supplies from the various 
ports to the interior. Often there was space available 
on the aircraft when they returned from the interior, 
and individual CAT pilots were the first to realize 
that this represented a valuable economic opportunity. 

On their own, they began to make purchases in inland 
areas of such raw materials as cotton, hog bristles, 
tobacco leaf, wolfram, tin, etc., which were in great 
demand in the major seaports. On those occasions when 
there was space available on inbound flights, such 
finished items as bicycles, which were in great demand 
upcountry, were used to take advantage of the available 
space and were resold or bartered at a substantial 
profit. It did not take long for the CAT management to 
recognize these profitable opportunities, and they 
formed a trading corporation known as the Wi Hauer 

Trading Company/ which was established as a preferred 
customer of CAT and had firs*t call oa^avallable space. 
This company was managed by Taylor, who has been 


mentioned previously. It became a rather profitable 
business venture. There was propably some ill feeling 
amongst those pilots who had been operating independ- 
ently, but they recognized the right of management to 
have first call on the use of their aircraft'. 

In the latter part of 1947, the momentum of the 
Chinese Communists' (ChiComs) advance began to accel- 
erate and to have an effect on CNRRA's operations. The 
effect of this advance on CAT operations has been vividly 
described in a short history of the line. 

"In the latter part of 1947, CAT began its 
historic flights against time — that is, the time 
left before the entry of the Communist forces 
in one town after another. First it was Weihsien 
in Shantung Province where CAT kept a Communist- 
surrounded city in food and essentials for many 
weeks while evacuating essential personnel to 
safety before the city finally fell. This pattern 
was to be followed in town after town as CAT 
planes flew in and out steadily on evacuation 
missions even while shells burst on the runways, 
sometimes damaging the planes. 

"On the mainland, CAT (which became Civil 
Air Transport operating as a private concern in 
the middle of the year 1948) maintained field 
offices in cities from China's far north to its 
most southern points and from its eastern sea- 
ports to its western frontiers. In many instances, 
all business matters as well as operations had to 
be conducted on the airfields, and our personnel 
were called upon to transact every phase of air- 
line operations and business no matter how-ske-tchy 
their previous experience or training might have 
been. In most cases, our people outdid themselves 
to accomplish the best possible achievements for 
CAT; challenging, perhaps because the company was 


not only new and still not well organized, but 
also because the tasks set before many of us were 
of such proportions as to be almost impossible. 
Everyone gave his best ef forts ' without stinting, 
and felt a personal pride in each and every 
incident that brought fame and renown to CAT. 

Then too, CAT was fighting China's war — a losing 
war to be sure — not with guns and bullets but 
with airline facilities, the only way available 
to bring out evacuees from surrounded cities as 
well as to bring supplies to those who had to 
remain behind. 

"As China's mainland fell slowly under the 
iron curtain from the north to the south, CAT of 
necessity moved its people, its planes, and its 
maintenance shops first from Shanghai to Canton, 
then from Canton to Kunming, then from Kunming to 
Hainan Island, and finally in utter exhaustion 
and confusion from Hainan to Taiwan. To those who 
know even a little of the importance to success- 
ful airline operations of permanent well-equipped 
maintenance facilities, it is readily under- 
standable what a difficult time CAT had during 
the years of 1948-1949. Our whole structure was 
jolted from one town to another only a few jumps 
ahead of our enemies, the Reds. CAT pilots were 
haggard, thin and exhausted from months of flying 
unheard-of schedules with no thought of refusing, 
because China's plight was obvious. CAT ground 
crews worked long, uncomplaining hours on air- 
craft, though schedules were so busy that 
maintenance was of necessity at a minimum and 
shops were moved so often that as much time had 
to be spent on assembling shops as on maintain- 
ing airplanes. CAT aircraft were dusty and 
dirty, but, like the pilots who flew them, they 
kept going until the pressure was off; that is, 
when Kunming fell in December of 1949. CAT found 
itself pushed back to Hainan, Hong Kong and Taiwan 
In April of 1950, Hainan, mainly through defection 
fell into the Red's hands and CAT fell back to 
China's last free bastion--Taiwan. " 7/ 8/ • • - 


NSC 34/2 

As the Chinese Nationalist situation steadily 
deteriorated throughout 1948 and early 1949, the U.S. 
posture crystallized into what the Nationalists con- 
temptuously termed a "wait and see" policy. From the 
military viewpoint, Major General David Barr, USA, in 
command of the Joint United States Military Advisory 
Group (JUSMAG) was convinced that the Nationalist . 
strategy of clinging to over-extended lines of com- 
munication, poor generalship, the absence of respon- 
sibility to the Supreme Command, the lack of an ef- 
fective air force, and the ingrained dislike of destroy- 
ing or abandoning supplies (which were, of course, 

taken over by the ChiComs and used against the ChiNats) 


doomed the Nationalists to defeat On 18 December 

10 / 

1948, General Barr advised that: — 

"Marked by the stigma of defeat and the 
loss of face resulting from .the forced evacu- 
ation of China, north of the Yangtze, it is 
extremely doubtful if the Nationalist Govern- 
ment could muster the necessary popular support 
to mobilize sufficient manpower in this area 
(South China) with which to rebuild its forces 
even if time permitted. Only a policy of • ■ 
unlimited United States aid including the im- 
mediate employment of United States armed forces 
to block the southern advance of the Communists, 
which I emphatically do not recommend, would 


E T 

enable the Nationalist Government to maintain a 
foothold in Southern China- against a determined 
Communist advance .... The complete defeat 
of the Nationalist Army is inevitable." 

Even though Generalissimo Chiang Kai-shek had 
nominally retired and gone into seclusion on Taiwan he 
had clung to the real reins of authority in the govern- 
ment and in the army. His successor as President, Li 
Tsung-jen, rather highly regarded as a man of integrity, 
was effectively neutralized in his efforts to institute 
real reforms, eliminate corruption, and stay the general 

deterioration. Ambassador Leighton Stuart strongly 

11 / 

endorsed General Barr's views. 

In view of the unanimity of reporting by highly 

competent observers who were on the spot, the National 

Security Council (NSC) in early February 1949 decided 

tentatively to avoid commitments to any factions and to 

suspend shipments of supplies, even those en route. On 

3 March 1949, the President approved NSC 34/2 as a 

12 / 

statement of United States policy toward China. — 

One of the recommendations made in NSC 34/2 was as 

"We should avoid military and political 
support of any non-Communist regime in China 
unless the respective regimes are willing 
actively to resist Communism with or without 
U.S. aid and, unless further, it is evident 
that such support would mean the overthrow of, 

or at least successful resistance to, the 
Communists . " 

The approval of this recommendation by the Presi- 
dent effectively ruled out any consideration of OPC 
support to the Nationalist Government as such, since, 
as stated previously, it was the considered opinion that 
the Nationalists could hold South China only by a policy 
of unlimited aid and the immediate employment of U.S, 
Armed Forces. Furthermore, the proviso that any support 
to other indigenous elements that "would mean the over- 
throw of, or at least successful resistance to, the 
Communists" appeared to rule out any other courses of 
action. A further statement of policy appeared in para- 
graph 18 of NSC 34/2: 

"Our principal reliance in combating Kremlin 
influence in China should, however, be on the 
activities of indigenous Chinese elements. Because 
we bear the incubus of interventionists , our of- 
ficial interest in any support of these elements, 
a vast and delicate enterprise, should not be 
apparent and should be implemented through appro- 
priate clandestine channels." 

Mr. Frank G. Wisner, Assistant Director for Policy 
Coordination (ADPC) , immediately asked the Policy Plan- 
ning Staff of the Department of State for instructions 


as to how to proceed in implementing this policy*. — 

The reply from State left little doubt that they con- 
sidered that the implications of the NSC action lay 

almost entirely in the realm of propaganda. A short 

statement near the close of the reply mentioned the 

eventual possibility for "large scale clandestine 

material support" to organize Chinese anti-Communist 

movements, "but both the situation in China and our 

operations there will have to develop considerably 


before such possibilities materialize." — State 
believed that covert propaganda in the form of news- 
papers, leaflets, radio, and the encouragement of 
rumors would be most immediately useful. 

On 16 April 1949 Ambassador Stuart in Nanking 
advised that he had been directly approached by Ma 

Hung-kuei, Nationalist general and warlord of Ninghsia 


Province in Northwest China. — Ma had emotionally 
expressed his determination to continue to fight 
against the Communists until the very end. Ma was a 
Moslem, and the hard core of his combat troops were 
Moslems. He stated that his primary and most urgent 
need was for ammunition for his weapons in order to 
keep up his struggle. Ma had previously been reported 
as having introduced various reform measures in his 
province and for having done a good job in training'" 
local militia units, but his ability as an Army Com- 
mander in large-scale warfare had not been tested. 

Ambassador Stuart was favorably impressed and recom- 
mended that State give consideration to giving some 
form of effective assistance to Ma. On 19 April, 
Minister Lewis Clark in Canton commented favorably on 
Stuart's recommendation 

At this point OPC drafted a proposed response to 

Stuart and Clark indicating that State recognized the 

advisability of exploring the Ma proposal. Ma should 

be given restrained encouragement, and the Department 

should be kept informed of Ma's whereabouts. State 

decided against the reply on the basis that Stuart 

could not act upon it and that Clark would not be 


sufficiently secure. — 

As spring moved on toward summer in 1949, the 
political climate in Washington with regard to China 
began to heat up. More and more attention was being 
given, with comment in the daily press and in respon- 
sible periodicals, with regard to the so-called "wait 
and see" policy and to the impact on Southeast Asia 
(SEA) in the event of a complete ChiNat collapse oh'' 
the mainland. Chennault returned to Washington from 
China in early May 1949, determined to remain in the 

States until the U.S. Government adopted a firmer anti- 
communist policy toward China. With his tremendous 
prestige as the founder of the famed Flying Tigers and 
later Commanding General of the 14th Air Force, he 
gained ready access to the highest levels in govern- 
ment. He appeared before the Senate Foreign Relations 
Committee in early May, leaving with them a prepared 
statement with accompanying appendix, and discussed the 
situation in China in detail with members of the com- 
mittee. He met with the Secretary of State and 
Dr. Philip Jessup, and with the Director of Central 
Intelligence. Other prominent Americans with broad 
experience in China, such as Lt. Gen. Albert C. 
Wedemeyer, USA; Admiral Oscar C. Badger, Commander 
U.S. Naval Forces, Far East; and Admiral Charles Cooke, 
USN (ret.), swelled the chorus of those supporting 
Chennault's position. 

On 9 May 1949 senior OPC officials met with 
Chennault in the General's office in the Hotel 
Washington. Those attending were Messrs. Frank G. 

Wisner, Carmel Offie, Franklin A. Lindsay and 


I — The General gave to Mr . Wisner a 

copy of the prepared statement submitted to the Senate 
Foreign Affairs Committee, and then discussed the 


statement in detail. In summary, the General felt 
that, with adequate assistance, Western China could 
be held on a line running roughly fron Ninghsia south- 
ward to Hainan Island. He attached major importance to 
Yunnan Province. He discussed a number of leading 
Chinese personalities, mainly provincial governors, 
speaking most highly of Ma Hung-kuei. He expressed his 
personal loyalty to the Generalissimo, but did not 
press for the channeling of assistance through the 
Nationalist Government. Instead, he urged that an 
American Mission should be established with elements 
located along the lines of communications and combat 
fronts, and that all aid should be sent to the Mission 
to be distributed by them to the fighting armies. He 
stated that he had just received a communication from 
Chiang Kai-shek in which the latter expressed himself 
agreeable to such an arrangement. 

The General also discussed the current status of 
his airline, Civil Air Transport (CAT), and his plans 
for i'ts future operations. No mention was made at this 
meeting as to possible utilization of CAT for support 
of OPC operations . 

A memorandum from the Department of State to OPC, 
on 8 July 1949, indicated that the Secretary of State, 


in conference with Mr. Paul Hoffman and Mr. Roger D. 
Lapham, had specifically rejected the subsidization of 
American airlines in China, including CAT. 

substitute for the positive operations envisioned in 

NSC 34/2. — 

It was considered that, under the broad policy of 
NSC 10/2 and of Mr. George H. Butler's (State Depart- 
ment) interpretation of NSC 34/2 (see pp. 12 and 13), 
OPC could make a survey of current conditions on the 
Chinese mainland, for the purpose of preparing recom- 
mendations as to possible actions to be undertaken. 

At the direction of the ADPC, therefore, a project was 
prepared which outlined the purposes of such 

a survey and established the necessary budget. This 
project was approved by ADPC on 6 June 1949. 

A considerable amount of thought was given to the 
selection of a suitable individual 


for the project. It was considered quite 
important that the individual so selected should have 

had previous experience in China. The final determi- 

nation was made that Mr. Malcolm Rosholt was admirably 

E T 

suited for this assignment. A few words might be 
pertinent at this time with regard to Bosholt . He was 
a journalist/lecturer who, prior to World War II, had 
spent a considerable amount of time travelling through- 
out China and had acquired an adequate fluency in the 
language. During World War II he had served with the 
OSS, most of his time being spent as liaison officer 
with General Hsieh Yo in a large pocket of resistance 
in South China between the Pacific shores and the 
internal Japanese lines of communication. After the 
war he had continued his interest in Chinese affairs, 
lecturing to various audiences in the United States. 

He was contacted at his home in Rosholfy Wisconsin, 
and invited to Washington, where the purpose of the 
project was explained to him, and he was asked if he 
would undertake the responsibility ! j 

He very willingly 

Consideration had also been given to the project 
outline to insure that Rosholt would be able to travel 
as freely as conditions permitted throughout those areas 
of China which were still accessible, with particular 
regard to the northwest. Arrangements were made with 
Chennault to write a letter to his partner, Willauer, 

accepted the assignment. 

S E (a R E T 

introducing Rosholt and requesting that CAT furnish him 
transportation as best possible to wherever he might 
wish to go. Consideration was also given to providing 
Rosholt with means of communication. 

it was no problem to 

arrange communications from Hong Kong. 

As matters turned out 

when Rosholt arrived in the field he decided that for 
security reasons it would be best that he not use CAT 
or any communications facility [ 

Rosholt departed from Washington in late June. 

he departed for upcountry. 

He had very little difficulty in arranging for trans- 
portation through CAT. He proceeded up into the north- 
west and made contact with Ma Pu-fang, ascertaining 

S E 5\R E T 

his general situation, his strength -and his intentions. 
Ma Hung-kuei, an ill man with a bad diabetic condition, 
was discounted as a possibility of strength. Rosholt 
contacted other war leaders, including General Pai 
Chung-hsi in Kwangsi and his old friend General Hsieh 
Yo in Kwangtung. He reported back to Headquarters when 
and as he could. By the time he returned to Washington 
in late August, Headquarters had a pretty fair outline 
of the recommendations Rosholt would make regarding 
possible assistance to resistance on the mainland. 

On 1 and 2 September 1949, ADPC and members of his 
staff briefed the Secretary of State, Dr. Philip Jessup, 
and Mr. George Kennan concerning the situation in 
Southwest and Northwest China and OPC potentialities in 
that area.” 7 

ADPC notes in his memo that Rosholt had acquitted 

himself extremely well in rendering an accurate and 

factual report of what he had seen and what he had been 

21 / 

told during the course of his survey mission. — In 

addition he was in the process of preparing a series 

of memoranda covering the historical record of key 

personalities who might be involved and certain - 

22/ 23/ 

economic possibilities in minerals, oils, etc. — — 



E T 

During the course of the two meetings Dr . Jessup 
raised the following questions: 

a. Would it be possible to undertake a 
series of fairly substantial support projects 
in a completely secure manner? 

b. Assuming that a program or programs 
were undertaken and the news got around and 
questions followed, what could the State 
Department do and what could they say? 

c. If it became generally known that 
the U.S. Government was involved in this sup- 
port program, would it not follow from this 
that the honor and prestige of the United 
States were involved in the success or 
failure of the resistance effort? 

d. On behalf of the Secretary, 

Dr. Jessup also wanted our estimate of the 
cost of the program. 

Dr. Jessup said that he could not understand why 
the Russians were able to do these things and get away 
with them, while at the same time it was thought it 
would be so difficult for us to operate without '* 
exposure . 


Mr. Wisner gave tentative answers to these questions 
and instructed his staff to prepare formal answers to 
each as rapidly as possible. 

There followed a series of memoranda which 
attempted to give honest and realistic answers to these 
questions. It was recognized that the larger and more 
complex any support program might be, the greater was 
the risk of suspicion that the U.S. Grovernment was 

On 27 September 1949, a formal proposal was sent 


by ADPC to Mr. George F. Kennan. It pointed out 

that the CIA had a responsibility for providing a con- 
tinuous flow of intelligence information from foreign 
areas, including China, and that OPC was specifically 
directed to engage in psychological warfare against the 
Chinese Communists and to exploit possibilities of 
reducing the influence of Soviet Communism in China. 
Current CIA and OPC field facilities were inadequate 
and all available time would be required to establish 
effective staybehind networks and underground channels. 
The only practical way of securing additional time 
would be immediately to undertake such clandestine" 
action as was possible in order to resist and impede 
the Communist conquest of the remaining free areas of 

China . 

The paper requested that immediate authorization 
be given for carrying out the following program: 

"6. Minimum Requirements: 

It had been decided that since time was such a 
vital factor and since assets it had hoped could be 
preserved were rapidly disappearing, suitable person- 
nel should be dispatched to the field so as to be in 
position to implement any measures receiving policy 
approval. In the event that such policy approvals were 
not forthcoming, such personnel were to observe the 
situation on the mainland and report their observations 
to Headquarters . A number of individuals were con- 
sidered for this assignment, a few were contacted, but 
none could be located who were willing to undertake the 

mission . 


At that time, Alfred T. Cox was serving as a 
Special Assistant to the Chief of Operations OPC, and 

following the return of Rosholt. Cox had earlier 
served with the OSS in North Africa, Italy and France 
in 1943 and 1944, and in China during the last year of 
World War II. He had been associated with and had 
maintained a friendly relationship with General 
Chennault . He did not have the language or area knowl- 
edge that Rosholt possessed, but he had had a consider- 
able amount of military experience and was also 
familiar with Headquarters procedures and with the 
problems involved in interdepartmental relationships. 

He was asked if he would accept a TDY assignment to 
implement any of the measures that might be approved 
by the State Department. Cox agreed to do so, and 
Rosholt indicated that he would be glad to accompany 
Cox and to serve as his principal assistant. 

It was arranged with General Chennault that CAT 
would provide cover for both Cox and Rosholt. Cox 
could act as a Special Assistant to the General with 
particular responsibility for political and military 
affairs, and Rosholt, in view of his journalistic 


background, would be assigned as a member of the air- 
line's public relations staff. After rather hurried 
briefings, Cox departed for Hong Kong on 3 October 1949 
with General and Mrs. Chennault, without waiting for 
State approval of the program proposed in ADPC's memo- 
randum of 27 September 1949. Rosholt followed two or 
three days later. General and Mrs. Chennault and Cox 
arrived at Kaitak Airport in Hong Kong on 8 October 1949 
They were met by Mr. Whiting Willauer, by Mr. James J. 
Brennan (the treasurer and secretary of CAT) and by 
other operating officials. The General retired to his 
residence to rest, and Cox, Willauer and Brennan met 
throughout the afternoon in Cox's room in the 
Gloucester Hotel. Cox briefed Willauer and Brennan in 
full on his mission and his cover; future procedures 
were then discussed. 

It has been previously noted that the mission 
departed for the field without waiting for State policy 
approvals. On 4 October 1949, ADPC received a memo- 
randum' from Mr. Kennan, the Counselor of the State 
Department, which stated that it was considered that 
OPC was justified in proceeding at once to make a' very 
discreet on-the-spot evaluation of the situation with 
regard to the objectives stated in Mr. Wisner's memo 



S E\C E E T 


of 27 September. — Mr. Kerman suggested that con- 

tinued planning be carried on with a view to mounting 
the full program as soon as careful evaluation had 
determined that there was a good chance of its success. 
He requested that he be kept informed of progress. The 
memorandum assumed that funds for the second phase of 
the program would be available from CIA appropriations 
as there was no assurance that State would have funds 
available for the purpose. 

Headquarters had quite properly decided that Cox 
and Rosholt would depart for the field under the author- 
ity provided 

since State policy 

approval had not been received for further action. 
Once the policy approval from Mr. Kennan was received, 

was drafted and was approved by 

Mr. Wisner on 12 October 1949. — The objectives, of 
the project were: 

a. Bolstering of selected elements in 
areas of China not under Communist domination 
which were resisting or were capable of resist- 
ing Communism. 

b. Conduct of appropriate OPC activities - 
against the Communist domination of China. 


c. Establishment of adequate standby 
facilities for the conduct of appropriate 
activities in China subsequent to Communist 
domination . 

In order to accomplish these objectives, it was 

proposed^ Zj on a subsidy 

project basis for a series of specifically related oper' 
ations, each to be described, approved and implemented 

Such operations could include, but 

were not limited to; 

1. Utilization of CAT as a means of provid- 
ing cover, communications, and transportation 
facilities for the achievement of the objectives. 

' 27/ 

by Mr. Wisner. 

On 10 October a quick visit was made to Canton, 
which at that time was the central operational base for 
CAT. The fall of Canton was imminent, and feverish 
preparations were under way to evacuate personnel and as 
much material as possible to Hong Kong. The LST, which 
contained a large amount of stores as well as shop 
equipment, and the supply barge departed for Hong Kong 
on the 12th. Willauer and Cox also returned to Hong 
Kong on the same day. CAT completed its evacuation of 
Canton on the 13th, the day on which the Communists 
moved in and took over the city. There were some last- 
minute problems as the coolies at the airfield, realiz- 
ing that their source of livelihood was leaving, tried 
to prevent the departure of the last aircraft. Willauer 
made a quick trip to Canton, and by means of bonus pay- 
ments was able to effect the release of the planes . 

Chennault and Cox proceeded to Taipei on 15 October, 
and were provided quarters at the Generalissimo's guest 
house in the sulphur springs area to the west of the 
city. The Generalissimo granted Chennault an interview 
on the afternoon of the same day. Chennault and-Coar 
had agreed that it would be better for Chennault to go 
unaccompanied because of his singular personal 




relationship with the Generalissimo. At this meeting 
Chennault briefed the Generalissimo in accordance with 
the cover story to the effect that private American 
citizens were willing and in a position to grant assist- 
ance directly to field commanders on the mainland who 
were continuing their resistance against the Chinese 
Communists. At this first meeting the Generalissimo 
was noncommittal, obviously not entirely happy, and told 
Chennault that he would see him again the following day. 

On the 16th Chennault again met with the General- 
issimo who advised that he would not object to or 
interpose any interference with the implementation of 
the plan proposed by Chennault, but he foresaw certain 
problems, particularly as regarded the morale of the 
leaders and troops who did not receive such assistance. 

Thus, with a sort of mixed blessing, it was agreed that 


the project could go forward. — 

Chennault and Cox returned to Hong Kong and then 
went on to Chungking. A meeting was arranged shortly 
after arrival with President Li Tsung-jen, Premier 
Yen S^hi-shan and members of their cabinet. Chennault 
again repeated the cover story to the President a'nd'*' 
Premier. They naturally were quite agreeable and 
grateful for the proposed program as they recognized 


S E C\R E T 

that it would bypass the Generalissimo's control over 
those leaders who were more loyal to the President 
than to the Generalissimo. Early the next morning, 
Chennault and Cox returned to Hong Kong. 

Having satisfactorily completed all of the protoco! 
arrangements, Cox and Rosholt immediately proceeded to 
Kweilin, which at that time was the headquarters of 
General Pai Chung-hsi. Before arrival they were able tc 
get word to Pai that they would like to meet with him. 
When they landed, one of Pai’s principal staff officers , 
a General Lee, who spoke nearly adequate English, met 
them in a rather dilapidated sedan which, nevertheless, 
was the pride of Pai's motor pool. They were taken at 
once to Pai's headquarters. 

After introductions and an exchange of pleasantries 
Cox and Rosholt went into conference with Pai, Lee acts 
as Pai's interpreter. The two Americans told Pai that 
they wished to be apprised of the current situation in 
his area and his future intentions. Pai stated that he 
intended to fight the Communists until the end, even if 
it meant falling back into redoubt areas and carrying 
on guerrilla warfare. He then outlined his current" 
position. His front lines, stretching from east to 
west, north of Kweilin, were under heavy pressure from 

the Communist forces. His left flank was rather securely 
anchored in the foothills leading up into the Yunnan 
Mountains. His right flank was giving him his major 
concern. This area extended halfway between the 
Kweilin - Liuchow - Nanning axis eastward to a point 
about halfway between that axis and Canton. Pai was 
aware that the Generalissimo was in the process of 
pulling armies out of the areas to his east and remov- 
ing them to Taiwan. ' The Communists had been attempting 
a double encirclement which he had had no trouble in 
containing on his left flank, but he was concerned very 
much with regard to the right flank. At the same time 
the Communists were continuously maintaining heavy pres- 
sure on his front line, making it both difficult and 
risky for him to attempt to pull out any of his forces 
to bolster his right flank. 

Cox and Rosholt then discussed privately their next 
action. They agreed that, particularly since Ma Pu-fang 
had been forced to flee and his resistance in the north- 
west had collapsed, Pai represented the only truly 
significant anti-Communist effort on the mainland; 
thus, giving assistance to him to bolster his morale- 
and to increase the effectiveness of his effort was 
justified. It was decided that Rosholt, having command 


of the Chinese language, would remain with Pai at his 
headquarters for a few days to continue his observa~ 
tions and inspect as many of the troop units as possible, 
while Cox would return to Hong Kong in order to cable 
the recommendations to Headquarters. Cox departed early 
the next morning for Hong Kong and from there cabled to 
Headquarters a summary of the conversations with Pai and 
a recommendation that assistance 


be furnished him as quickly as possible. 

Headquarters approved the recommendation and reportec 
that arrangements were being made with the Treasury 

This money was provided rather quickly, but 

there still remained the problem of how and in what form 

these funds were to be transferred to Pai. 

It was agreed by all that the funds for Pai should 

not be furnished in the form of U.S. currency because 

of the requirement of nonattributability . It had been 

suggested, moreover, that the funds be furnished in the 

form pf silver dollars, but the great weight of this 


amount of dollars made this impossible. — Since the 


The silver dollars would have weighed well 

overj J requiring at least two C-46 flights. 

It would have been impossible to take such a load out 
of Hong Kong and into Kweilin securely and without 

Hong Kong dollar was as acceptable as the U.S. dollar 
in Southern China, it was therefore decided that the 
payments would be made in Hong Kong dollars. 

At that time the uncertainty of events on the main- 
land and speculation as to the future of Hong Kong itself 
was causing a wide daily fluctuation in the free money 
exchange market in Hong Kong. The sudden dumping of 

U.S. dollars on the Hong Kong exchange would 

be noticed, if only as a matter of curiosity, and 
undoubtedly would have an effect on the rate of exchange. 

Through Wi Hauer it 

was arranged for the exchange of U.S. currency in incre- 
ments so as not to affect the market unduly; Willauer 
used the cover story that heavy losses sustained by CAT 
in the evacuations on the mainland forced the company 
to find financial support in the U.S. so as to meet it's 
more pressing obligations. This was a reasonable story 
in view of CAT's successive evacuations, losses of 

s ex ret 

material, and losses in exchange, particularly in 

Chinese currency. 


large wicker baskets were required to transport this 
currency. With the assistance of CAT operational 
personnel, the two baskets were placed aboard a CAT 
C-46 without attracting the attention of the Hong Kong 
customs authorities or any other British agencies. 

Cox and Rosholt departed for Kweilin, at the same 
time arranging to have Pai apprised of their impending 
arrival. They were again met at the airfield by Lee and 
his staff, accompanied by a dilapidated but still 
operable truck. The two Americans were startled to see 
their luggage, including the wicker baskets, thrown on 
the truck, which then drove off with a load of coolies. 
You can imagine the mental state of Cox and Rosholt at 
that moment. Dispensing with formalities as rapidly as 
possible, they entered the sedan with Lee and two other 
officers and took off. On arrival at Pai's headquarters, 
they were overjoyed to see their luggage, complete with 
wicker baskets, sitting outside the door. It was 
explained to Pai that the two Americans had been very 


much impressed with his determination, his ability, 
and the status of his forces. They had communicated 
these impressions to various wealthy persons in the 
U.S. who felt great friendship for Free China. These 
persons had volunteered assistance which, at the 
moment, could only be in the form of money. The two 
Americans had, therefore, come to bring him a con- 
siderable amount of cash which they were sure would be 
used wisely and well, both on behalf of his troops and 
for whatever local purchases might be feasible. 

They requested that Pai designate officers to 
count the funds with them, since they in turn had an 
obligation to furnish proper receipting of funds that 
they had transferred to the principals who had provided 
the funds. Pai designated Lee as his representative. 
The funds were thereupon counted and Pai receipted for 
them. Pai assured the Americans that the money would 

have a very beneficial effect on the morale of his 

. 31/ 

troops . — 

31. It has been noted that various Headquarters 
reports of this payment to General Pai have shown dis- 
crepancies both as to the kind of currency paid and the 
amount. Several memos state payment was made in silver 
dollars, while others confused UK dollars with U.S. 
dollars . 

E T 

Again it was agreed that Rosholt would remain with 
Pai for several days while Cox returned to Hong Kong to 
report the transfer of funds, to begin planning for 
similar operations in other areas, and to initiate 
action on other activities 

Headquarters was informed that delivery had been 
made, and Pai's receipt for the funds was sent in by 

Rosholt and Cox continued to alternate their visits 

to Pai's headquarters, spending a day or two each time. 

These visits were helpful to his morale as the situation 

was steadily deteriorating. On 26 October 1949, Cox 


reports Pai's situation as he saw it. 

"I feel that cables have fairly well 
covered our course with General Pai and our 
plans for immediate aid. I would like to 
caution against paying too much attention to 
newspaper reports as to conditions at his 
front, and to discount the importance of his 
possible withdrawal from Kweilin. I am much 
more worried that Pai will try to hold 
Kweilin too long, in order to justify the aid 
he is expecting, and that he will have some 
of his forces pretty badly cut up. His 
position at Kweilin is tenable only so long 
as his right flank holds against the Commie 
forces coming westward along the West River 
from Canton. Prior to the time of my visit,’ 
responsibility for the flank protection had 
been delegated to the troops now evacuating 
from Canton. The Generalissimo had suddenly 
pulled two of his armies from the mainland to 


Formosa. Pai had to rush two of his main 
front armies to the South to protect his 
flank and unless they arrive in time and 
can stop the Reds, Pai must pull back to 
Liuchow. The Red threat South from the 
West pincer of a possible double envolve- 
ment has been turned back by Pai's troops. 
There is little doubt Pai is faced with an 
all-out effort to destroy him. His planning 
against this includes guerrilla warfare, 
stay behind groups, scorched earth policy and 
CA attacks on supply routes. If the Commies 
get too overextended he may be able to do a 
lot of damage to them." 


On Wednesday, 23 November 1949, the day before 
Thanksgiving, Cox made another visit to Pai. While 
en route he was called forward to the cockpit by the 
pilot, who pointed below to a massive crossing of the 
West River. There were two almost solid lines of 
small craft. Those moving from north to south were 
full of troops. The empty boats were moving from south 
to north to pick up new loads. It was almost certain 
that the troops involved were Communists, not part of 
Pai's armies. The place was roughly in the area of 
Wuchow, which was about half way between Canton and the 
Kweilin-Liuchow axis. 

By that time, Pai had anticipated that he would 
have to pull back from Kweilin, and his headquarters 
would then be established at Liuchow. Immediately' on 
landing, Cox told Pai about what had been seen, and the 
exact location was pinpointed on the map. Cox returned 
to Hong Kong on a Lutheran Mission plane on 24 November. 

During the night of 24-25 November Liuchow fell to 
the Communists, and Pai once again had to pull back. 

He established his headquarters at Nanning. During "the 
week after Thanksgiving, a delegation of U.S. Senators 
and Congressmen, including Senator William Knowland of 


California, visited Hong Kong on a tour of the Far 
East. Senator Knowland wished to go upcountry. While 
other members of the party remained in Hong Kong, CAT 
flew Knowland first to Chungking to visit the President 
and Premier, and on the way back stopped off at Nanning 
for discussions with Pai . After leaving Nanning, 
Knowland insisted on being flown over Liuchow so that 
he could see what the Communist-occupied ground looked 
like. He made a most favorable impression on Chinese 
and Americans alike. 

Relentless Communist pressure finally forced Pai to 

break up his army. Most of his troops fled south to 

French Indochina where they were peacefully integrated; 

many established agrarian communities of their own 

where they grew their own food and existed without 

33 / 

causing trouble for the French authorities. General 

Pai, himself, and a few of his troops were able to make 
their way to Hainan Island where, of course, he had no 
army and, therefore, no influence. He returned to 
Taiwan and, as was customary, the Generalissimo 
appointed him to a high-sounding strategic planning 
board, granting him an allowance that permitted him -to 
maintain a home and a small retinue of staff officers. 
Cox visited him on a number of occasions, always to be 


S E C ikE T 

warmly received, and long discussions were held with 
him as to the future. It seemed apparent that he had 
not had time to really build up any kind of staybehind 
net, although he did maintain some form of contact with 
friends in Kwangsi. 

After liaison had been established with Pai, 
attention was paid to other areas where assistance 
might be given the anti-Communist cause. Southeastern 
China had to be written off, because it was under the 
control of the Generalissimo; he was rapidly removing 
its armies to Formosa. There seemed to be no way to 
bolster effective resistance. Two possibilities 
remained, however: Hainan Island and the Province of 

Yunnan. On Hainan Island two actions remained to be 
taken. The first was to encourage the governor of the 
island, General Chen Chi-tang, to continue to resist a 
Communist takeover of the island. He had been joined 
by General Hsieh Yo, who had pulled back to Hainan from 
the Canton area and still had some of his troops with 
him. 'The bulk of his forces had been transferred to 
Taiwan, Secondly, it had been the original intention 
to establish a main CAT base in the 
southern end of Hainan Island where there was an air- 
field and a harbor at Sanya and Yulin. This airfield 
could be used for air support of the mainland. The 


port offered a ready facility for transshipping supplies 
brought in for forces on the mainland. It was decided, 
therefore, that at the first opportunity Rosholt, who 
knew Hsieh Yo very well, would visit Hainan Island for 
discussions with Chen Chi-tang and Hsieh Yo to determine 
their intentions with regard to holding the island. 

In Yunnan, a mountainous province which normally 
would be considered quite defensible and which had 
proved to be so in World War II, rumors had been rife 
that Governor. Lu Han (who had assumed this post shortly 
after World War II when the Generalissimo had forced 
the removal of Governor Lung Yun) would turn over the 
province to the Communists. The main CAT engineering 
base was located at Kunming, as chance would have it, 
at a major installation that had been named Chennault 
Airfield. Any sudden defection to the Communists would 
mean a very considerable loss of material and aircraft, 
and the possible capture of a considerable number of 
personnel, many of whom were Americans with families. 

It was decided that, initially at least, Rosholt could 
handle the situation at Hainan Island, and Cox would 
go to Kunming for conversations with Lu Han. • 

Cox visitdd Lu Han in Kunming in mid-November, 
accompanied by P.Y. Shu, for many years Chennault's 

trusted interpreter. He carried with him 
which Headquarters had authorized him to use at his 
discretion, since time was so obviously short, and 
communications had not been established at that time 
except from Hong Kong . 

He found that Kunming had not changed greatly from 
when he had last seen it in 1945 except, of course, it 
was a little shabbier, a little dirtier, a little more 
depressing. Lung Yun had amassed a tremendous fortune 
during World War II, largely by pilfering tires and 
jeeps, and constantly tapping the oil line running 
across the hump from Burma into China. At one time 
during World War II he had such a large stock of jeep 
tires that he issued an edict that all ox carts must 
have jeep tires on their wooden wheels; in 1949 one 
could still see ox carts with bits and pieces of tires 
clinging to the wheels. 

Cox's reception by Governor Lu Han was gracious. 
After the usual exchange of pleasant conversation, Lu 
was queried as to what he thought of the future of 
Yunnan in view of the rapid ChiCom advances. Could it 
be defended, and would he defend it? Just how did' he 
view the situation? The Governor replied at length 
and with considerable honesty. He admitted that the 

natural geography of the province made defense quite 
possible. However, he pointed out that he had no 
sources of supply or of funds, and that he could not 
long withstand a siege without assistance. There were 
indications also that he, in effect, was saying that 
since he could not hold out forever, the best thing to 
do was to reach an accommodation with the Communists • 
which would permit him to survive with at least some 
prestige. He was told that a number of wealthy and 
influential Americans were vitally interested in the 
continued resistance of the Chinese people against the 
ChiComs, and th4t the writer had come prepared to offer 
at least a token of support that might be of encourage- 
ment. He replied that he would very much appreciate any 
support that he might be given, but that he recognized 
the practical impossibility of such support being of 
the type and amount that might permit him to continue 
for very long. At that point Cox turned over to him 
asking only for a receipt which could be 
handed to the people who had given the support, and 
hoping he would resist as long as possible. No com- 
ment was made on the fate of the CAT facilities *and" 
personnel beyond the passing mention that a tangible 
evidence of the good faith of the Governor was the mere 

S E C x E T 

fact that this facility and the personnel had remained. 
The Governor said that he very much appreciated that 
faith; Cox was sure that Lu knew he was being asked 
that, if the time came when he felt he had to reach an 
accommodation, he would insure that American personnel 
of CAT would not be unduly endangered. 

On 16 December 1949, Lu Han hade his decision and 
the airfield, the CAT facility, and personnel were 
seized by what had formerly been Nationalist Government 
troops, Lu Han then, hastily living up to his implied 
pledge, rushed to the airfield with his personal body- 
guard, secured the release of the aircraft and CAT 
personnel. These people were able to evacuate together 
with other Americans in Kunming, including the vice 
consul, and with as much equipment as they could carry 
in the space available on the aircraft. 

The price of may seem high to a casual 

reader. However, in terms of aircraft, equipment, and 
much more important, personnel, it was a low price to 
pay for getting out of Kunming as well as was accom- 
plished. The Americans alone could have been held for 
ransom of many times the amount paid to Lu Han. * 

In the meantime, Rosholt had gone to Hoi-Hou, the 
capital of Hainan Island, in order to talk with Chen 



S E 

E T 

Chi-tang and Hsieh Yo. Chen, a rather elderly man, had 
not had too much in the way of combat military experience 
He reiterated his determination to hold the island and 
was interested in what Rosholt had to tell him about 
plans to establish a CAT base in the southern part of 
the island and also the possibility of developing some 
of the island's natural resources, which were con- 
sidered to be plentiful. 

Rosholt also talked with Hsieh Yo and found that 
although his desire and determination were still high 
he had not been able to maintain control of sufficient 
troops to be able to exert much voice in planning for 
the defense of the island. 

Upon Rosholt 's return to Hong Kong, he and Cox 
discussed what might be the most reasonable course of 
action and agreed that a sum 

should be paid to Chen Chi-tang in order to stiffen 
his will to resist, and that at least a token payment 
should be made to Hsieh Yo in the hopeful event that 
at some date he might be able to exercise a greater 
voice in establishing the defenses of the island. 
Recommendations to this effect were approved by’ 
Headquarters . 



S E\C R E T 

Hong Kong 

At about this time, Cox and Rosholt were joined in 

and Cox 

were very old friends, having served throughout the war 

together, and arrival was indeed very welcome. 


would go to Hainan Island 

It was decided that 

to meet both Chen Chi-tang and Hsieh Yo, and to make 

of the island to inspect the airbase at Sanya and Yulin. 
In the meantime, CAT engineering personnel had been 
preparing engineering studies on the nature and cost 
of facilities that might be required if an operational 
base were to be established there. However, the rapid 
turn of events and the swift advances of the ChiComs, 
the dissolution of Pai’s armies, and the defection of 
Lu Han to the ChiComs focused attention, both in Head- 
quarters and in the field, on a re-evaluation of the 
desirability of establishing the proposed Hainan base. 

It was recognized that if a decision was made to move 
to an established base in Taiwan, it would inevitably 
put the Generalissimo in a better position to oversee 
Agency operations. As a practical matter, the deci- 

sion had to be made to abandon the idea of a Hainan 

S E 


base and, instead, to seek base facilities on Taiwan 
under the best possible terms that could be arranged 
with the ChiNat Government. 

Negotiations for establishing a base on Formosa 
proved to be less difficult than had been expected. 
Permission was granted to bring the LST and the supply 
barge, "The Buddha", to Kaioshung, a good port in 
southern Taiwan some twenty or thirty miles from the 
Tainan Airfield, a major Chinese Air Force base in 
good condition. Warehousing space was also allocated 
to CAT at Tainan. As rapidly as possible, the move 
was made. The shops already installed on the LST 
remained there, and other facilities were established 
at Tainan. Although a considerable amount of trucking 
back and forth between the port and the airfield was 
required, it did not take too long to establish the 
operational base. 

The last days on the mainland were marked by a 
series of unfortunate incidents. The area around 
Mengtze, in the southeastern part of Yunnan Province, 
contained valuable tin deposits, and every effort was 
made to remove as much of the tin as could be mined 'at 
the last minute to ports of Indochina, either Hanoi or 
Haiphong. Contracts were made with CAT for the airlift 


of the tin ingots. On 8 November 1949, a CAT C-46 
lost an engine on takeoff and crashed. The two 
Chinese crew members, a co-pilot and radio operator, 
parachuted safely. One made his way back to CAT, the 
other was never heard from again. The pilot, Captain 
Norman Jones, went down with the aircraft and was 

On 6 December 1949, a CAT C-46 piloted by Captain 
James B. '’Earthquake McGoon" McGovern, while en route 
from Hong Kong to Kunming, encountered unfavorable 
weather conditions, lost communication with Kunming 
and wandered around lost until almost out of fuel. 

The pilot successfully made a belly landing on a sand 
strip in the middle of a small river, with no injuries 
to passengers or crew. However, they were all quickly 
rounded up by the Chinese Communists. 

McGovern, a fabulous character of whom more will 
be said later, weighed somewhere in the vicinity of 300 
pounds and was a boisterous character, known throughout 
the entire Far East. The ChiComs began to march the 
crew and passengers (McGovern was the only American) to 
internment in a prison. With his tremendous wei'ght'and 
possibly a lack of good physical condition, McGovern 
refused to walk; and, probably because of his size and 


his determination, the ChiComs finally had him carried 
in a portable sedan by coolies. As the story goes, 
McGovern was such a holy terror to his Chinese captors, 
demanding extra food, better food, women on occasion, 
etc., that after six months the ChiComs gave up and 
released him. He crossed the Hong Kong-China border on 
foot, heavily bearded and down to what was for him a 
slim and trim 185 pounds. Other individuals captured 
by the ChiComs were not so furtunate. 

The tin airlift from Mengtze continued as long as 
it was possible to fly in and out, but orders had been 
given that ho American or any other CAT personnel would 
remain overnight at Mengtze, always taking the last 
plane out back to Haiphong. On the evening of 
15 January 1950, Captain Robert Buol, who was in 
charge of the tin lift, having been assured by the 
ChiNat Generals that the ChiComs were still far away, 
decided to remain overnight against his standing 
orders. The ChiComs moved in that night and Buol was 
taken prisoner. As the first CAT C-46 came in on the 
morning of the 16th of January, it encountered machine- 
gun fire as it attempted to land. After making another 
try, with the same reception, the plane returned to 
Haiphong. Later in the day, another C-46 flew in and 

S E C1E T 

attempted to land and get Buol out. It too was met by 
machinegun fire, and the co-pilot, ’’King George” Davis, 
received a bullet in his leg. As luck would have it, 
this particular pilot was a British citizen. He was 
highly indignant over the fact that although the 
British had just recently recognized the Chinese Com- 
munist Government, and he was wearing a bright red tie, 
he was the one hit by the bullet. 

Buol was taken to Kunming where, although he was 
treated quite well, he was held in prison until the 
summer of 1955 . On his release he was given a thorough 
physical examination and returned to the States. He and 
his wife, Sue Buol, the long-time secretary of Chennault, 
were invited to Washington for what they believed to be 
extended debriefings. Cox met with them there at the 
time and found that they had been almost completely 
ignored, and that no real attempt had been made to 
debrief the pilot. Buol was again given a thorough 
physical examination, and seemed to be in good shape. 

He spent a number of months with his wife on the West 
Coast, appearing to be completely normal. He and his 
wife wanted to return to CAT and decided to travel' "back 
by way of Europe so that Buol could contact two or 
three of the Frenchmen who had been imprisoned with 


him in Kunming. He preceded his wife, Sue, by a few 
days. Mrs. Buol was at dinner with the Coxes at their 
home in Washington when word was received that Buol had 
died very suddenly while taking a hot bath in a small 
town in the south of Prance. An inquest was ordered 
held in view of the peculiar circumstances of his sudden 
death, and it was determined that the capillaries in 
his lungs had suddenly collapsed and that he had died 
from excessive flooding of blood into the lungs. It 
was Cox's unprofessional opinion that Buol should have 
been more carefully instructed to effect a gradual 
change of diet after living on a rice diet for more than 
five years, and that the sudden change to rich American 
types of food probably had proved more than his system 
could assimilate. 

In the meantime, back at Headquarters the China 
operations were, at least as of 25 November, still con- 
sidered to be worthwhile and worth continuing. In a 
memorandum of 25 November 1949, Mr. Wisner reported to 
his principal staff officers on his presentation of the 
status report on China given in Mr. Webb's office at 
State. Present were Mr. Butterworth, Mr. Joyce,- and 

Mr. Sheppard from State; General John Magruder and 


Mr. Halaby from Defense; the DCI and Mr. Wisner. 


S E^bsR E T 

Mr. Wisner reported that the majority of the people 
present seemed very pleased with the way things were 
going although Mr. Butterworth, though not entirely 
opposed, did not seem to be too happy. 

The possible use of Haiphong as a base was dis- 
cussed at length. It was pointed out that the French 
might be willing to permit this as long as the Com- 
munists did not hold the contiguous areas such as 
Yunnan, but that they might swing the other way just 
at the time when the base was most needed. There was a 
discussion also of the recognition of Communist China. 
It was thought that the Indians would recognize the 
ChiCom Government very quickly and would be followed by 
the British. 


s E T 

During the early weeks of December, Mr. Wisner 

attended a high-level meeting with State officials to 

discuss the future insofar as China was concerned. As 

a result of these meetings, he wrote a memorandum to 

his principal staff officers on 19 December 1949, 

advising them that they should be prepared for a change 

in policy guidance on OPC operations in China which 

would probably limit any further support of resistance 

or guerrillas but which would probably permit the con- 


tinuation of propaganda operations. — 

On 31 December 1949, Mr. Wisner received a memo- 
randum signed by a Mr. Robert G. Hooker on behalf of 

Mr. Kennan. — The memorandum made reference to the 

situation arising from the collapse of organized 
Nationalist military resistance on the mainland. It 
stated that commitments on the mainland should be with- 
drawn as rapidly as possible since there was no con- 
fidence that any guerrilla operations would produce 
results commensurate with the risk and political 
hazards in preparing and following such a course. It 
was deemed unwise for additional Americans to procee'd 
to the Far East in connection with this operation, and 
directed that those Americans now there should be 


precarious situation in French Indochina, the latter 
territory should not be used as a base for covert 
operations directed against China. 

The Wisner memorandum did leave open the possi- 
bility of maintaining effective contact with guerrilla 
or resistance leaders for the purpose of intelligence 
or for providing estimates in the future for such 
situations as might develop. 

He further noted that the highest 
degree of expert political thought and ideological 
advice would be necessary. 

A digest of this State Department policy guidance 
was cabled to Hong Kong for Cox. 

The ChiComs were not apparently in any great rush 
to seize Hainan Island. Chen Chi-tang and his forces’ 
remained there until April. At that time, the ChiComs 
crossed the narrow channel and took the island, 


S E T 

practically without opposition. As many Nationalist 
troops as possible were evacuated from the south of the 
island to Taiwan. So ended the last vestige of Nation- 
alist control over the mainland with their only remain- 
ing territory the island of Taiwan and a few offshore 
islands . 

It might be appropriate 

at this time to note the failures and some of the 
accomplishments of this particular phase. 

It was true that not enough time was gained by 

supporting the mainland forces to establish adequate 

which had been one of 

the primary purposes of this phase of the project. By 
force of circumstances, furthermore, 


operations had to be moved to Taiwan where 
they were subject to more control by the Nationalist 
Government than was desirable. In point of fact, the 

which was 

perfectly logical since the main CAT headquarters, 
particularly insofar as finances were concerned, stayed 
in Hong Kong. There were a number of factors on ’the' 

plus side, however. First of all,r 

Secondly, excellent 

relationships had been established 

but for reasons of security and convenience it was much 
more desirable! — - 

At the time _ J 

discussions were held between 

OPC and 0S0| 

, : AJsjL 


S E C x E T 

In point of fact, in the field 0S0 and OPC found 
no difficulty or incompatibility in pursuing their 
respective interests. On many occasions they assisted 
each other in carrying out operations. The new State 
policy toward operations in China as given to OPC at 
the end of December 1949 permitted continuing contact 
with resistance and guerrilla groups on the mainland 
for intelligence purposes, and to take advantage of 
situations that might develop. 

There were occasions when OSO had 

opportunities, without the funds, at which time OPC 
could be of assistance. There were other occasions 
when OPC had the opportunity but not the policy, and 
then OSO could assist on the grounds that it was an 
intelligence operation. There, was more than enough 
room and work for all, and a spirit of harmonious co- 
operation rapidly developed between elements in -the - 

s ex: ret 

This completes the story of the attempt to support 
the mainland resistance. Succeeding sections of this 
paper will cover earlier days in order to recount some 
of the other activities which occupied the attention of 
the OPC Mission, 

R T? 'T' 

•M i 

S E C\E T 


This section of the paper will describe the support 
provided to CIA activities 


the CAT Airlines. In general, air support will not be 
included, except in a few instances where it was required 
to move material or personnel for Agency purposes. 

It should be recognized that an unusual situation 
prevailed in the Far East from earl y 1949 to a pp roxi - 
mately 1955. L, 


who has administrative and clerical 

and who is able to main- 

tain complete records and to furnish required monthly 
reports, and the like. He can conduct operations with 
a tight control (particularly insofar as records are 
concerned), something that cannot be done j 

Many of the activities that will be 
listed j.n this section of the paper would in most 
instances be controlled and directed! 

When Cox proceeded to the field in October of 1949 

there were no OPC Stations as such in the Far East area. 

All records had to be maintained 

since the writer, informally designated as 

Chief of 

Mission, CAT, had to operate without the possibility of 
maintaining records of any sort. A great number of 

problems and difficulties arose, especially with regard 
to reporting and administrative records. 

Such a situation is rare and probably no longer 
exists. As a matter of history and in the event that 
such a requirement should arise in the future, however, 
the material presented in this section may be of value. 


Cox did not receive his Letter of Instructions 
until 3 October 1949, the date of his departure. It 
was stipulated therein that the instructions be com- 
mitted to memory, since the paper could not be carried 
to the field. It was also stipulated that, prior to 
departure, the writer should consult with representatives 
of all of the program branches of CPP/OPC to determine: 
a. What special interests, problems, or 
questions they might have with respect to the 



b. What specific instructions they wished 
to convey | 

in their 

particular field of responsibility. 

In view of the time element, consultation with the 
various branches necessarily had to be limited to 
perhaps a half-hour for each branch. 

Cox met with 

and spent half an hour 

with them. The discussion had to be general in nature. 
It was indicated that 

would probably be coming 

to the field at a later date to carry out propaganda 

responsibilities. The Letter of Instructions contained 


no specific provisions with regard to propaganda. 

After the fall of the mainland, and after Cox had 

returned to the field, he was given a supplementary 


Letter of Instructions which contained specific in- 


and any auxiliary psychological warfare 


which concerned itself with instructions and budgeting 
for propaganda and psychological activities. It stated 

who had already arrived in the field- 

earlier in the year 

for that program. The statement was made that Cox was 


s e\r E T 


to bear in mind the Department of State directive that 
dependence upon and cooperation with the Nationalist 
Government in the implementation of the propaganda 
program was to be held to a minimum. Also, Cox was to 
be guided by State and NSC policy directives, but all 
U.S. action was to be such as to encourage initiative by 
the no n~ Communist forces, and to encourage action which 
would appear to the inhabitants of the area as com- 
patible with their national interests and worthy of 
support. Activity should be directed at the negation 
and eradication of Soviet influence in China, and the 
diffusion and diversion of Chinese Communism to the 
point where it would be replaced by Chinese Nationalism 
and some form of indigenous democracy. 

At this point a few words might be in order with 

regard to He was of slight build, but with' a 

tremendous amount of drive and energy. He was very 
strongly motivated against Communism, almost to the 
point of fanaticism. He was careless of dress and 
careless (perhaps sloppy would be the proper word) in 
his accountings and his reportings to Cox. He worked 
at a tremendous tempo and, although he was often at the 
Correspondents Club, it was obvious that he was much 
more concerned with his job than the other correspondents 


S T 


in the area who were procuring most of their information 
through British Hong Kong offices, the American Consulate 
General, etc., and were not particularly energetic in 
active contact with indigenous Chinese elements. 

worked with great energy at trying to contact large 
numbers of refugees as soon as possible after they 
crossed the Hong Kong border . 

As a result of these interviews,; 
book entitled 

wrote a 

This book 

received considerable acceptance, 

It was unfortunate that before 

came to the 

field arrangements had not been made between Head-' 

: | 

quarters and 

regarding any future publications , 

At a later date friction apparently developed between 
and Headquarters elements, since Headquarters 

felt that he was a full-time employee during the period 
in which he gathered this material and wrote the book, 

and that at least a portion of the royalties received 

from the sale of the book should go to Headquarters, 

rather than all being kept 

l 3 


effort came through the good services 
who introduced him to Hsieh Ch'eng-ping. 

Hsieh, at the time approximately 45 years old, was 
well educated, having received his Bachelor of Arts 
Degree in the History Department of the National Central 
University in 1928; later, after attending Michigan 
University in 1928-1929, he received his Master of Arts 
in Political Science and History at Columbia University. 
He was strongly anti-Communist and not pro-KMT. He was 
active in various so-called Third Force movements and, 
at that particular time, was General Manager of the 
"Freedom Press'.', a publication • issued in Hong Kong. 
Previously he had been a member of the Young China 
Party of the Democratic League and of the National 
Salvation Association in Shanghai. and Hsieh 

cooperated very well and produced a number of effective 
publications. • 

On 3 October 1952, having been recalled to the 
States, reviewed his relationship with Hsieh in 


s"e' v 6vR E T 

s eN: ret 

The Chinese Communists were extremely active in 
Hong Kong. They controlled a number of newspapers, 
including the one with the largest circulation. They 
also published a number of magazines, booklets, 
pamphlets, comic books, etc. Hsieh's activities in 
the anti-Communist propaganda field were attended by 
constant danger of retaliation from the Communist ' 
elements in Hong Kong. On one occasion he and his 
wife and children, en route ,o a movie, were set upon 

by a political gang. Hsieh was badly beaten up and his 
wife suffered a dislocated jaw. On another occasion 
the British political police raided Hsieh's home 


found the money on his premises. He told them, as he 
had told them before, that his rich in-laws in San 
Francisco were the source. 

great pressure was put on 
Hsieh by the British authorities. Word was received 
that the British were considering deporting Hsieh, 
possibly to Red China. This would have been disastrous 
for him and would have wrecked the considerable PW effort 
which he was conducting. Up to that time he had kept 
his own name out of his publications and had not con- 
tacted foreign correspondents personally, mainly for 


he then put 

reasons of safety. 

his true name on the masthead of 

and made it a point to give a lunch to foreign corre- 
spondents and to develop contacts with them. This would 
have assured widespread publicity abroad if he had been 
deported, j British police were 

very annoyed when Hsieh took this action. 


S E E T 

S E 

E T 

A CAT pilot, jhad been stationed 

for a considerable period of time in northwest China. 
Although not considered a top-flight pilot, he was .con- 
ducting small plane operations throughout the area. He 
was intelligent and politically rather astute, 



by representatives of the State Department and the mili- 
tary attaches. 

and evidenced an interest in leaving CAT and entering 

the publications field in Hong Kong. 

At that time a publication that was failing, but 

which owned printing facilities, was available for pur- 
chase . 

in the purchase of this facility, in order to put out a 

monthly magazine! was 

told that a Headquarters decision would be asked. A 
cable requesting a decision was promptly dispatched. 


S E 

E T 

amount of distribution. It is questionable, however, 
whether at that time Headquarters would have approved 

investment in a propaganda activity that was so obvious- 
ly American-supported. 

Mention has been made previously of the supplemen- 
tary Letter of Instructions furnished Cox on 10 March 

1950. During the process of coordinating the draft 

Letter , 

Acting Chief for 

for OPC, registered his nonconcurrence on the grounds 
that the letter was so vague as to be entirely meaningless 
stated that if Cox were to be given guidance 
with respect to the PW "line," the amount of detail would 

have to be much greater than that contained in the Letter 
of Instructions, jvas quite correct. Although Cox 

was briefed in detail at Headquarters as to the policy 

line on propaganda as of that momer. , very little addi- 


tional guidance was ever furnished to the field. When the 
Korean War began in June 1950, certain changes in the prop 
aganda line were in order; certainly they would have been 
even more in order when the Chinese Communists entered the 
conflict. In those years the kind of propaganda guidance 
currently furnished the field did not exist. In some re- 
spects this was not entirely bad since .there were people 
in Hong Kong, both Chinese and American, who were constant' 
ly contacted in order to discuss in general terms as to 
what might be the most effective propaganda line to take. 

and Hsieh were particularly close, and both 

were able to influence Hsieh consid- 

erably in the content of the publications. There is littl< 
question, from the Headquarters control point of view, how- 
ever, that ] followed his own line. The chances are, 

having the personality he does, that he would have followe* 
his own line of reasoning in any case. However, since sue! 
guidance did not exist at the time, this can be only a 


Several months after 

arrival in the field, 

'came to Hong Kong, indicating that the basic pur- 

pose of his visit was to discuss 
the most suitable location 

Cox arranged for^ 


and problems of distribution. 

One incident in the propaganda effort, which now 
really seems ludicrous, was extremely irritating at the 
time . 


propaganda campaigns described above would be difficult 

to make. _ _ _ __ 

was probably more productive than any of 
the other efforts. Initially, the various projects under- 
taken with Hsieh Ch'eng Ping did appear to be worthwhile 
and to be having some effect on the local Chinese commun- 

however, the effectiveness of Hsieh’ s efforts appeared to 
be gradually decreasing. 

The average Chinese in Hong Kong was neither pro- 
Communist nor pro-KMT. He simply preferred to live in 
the Free World, did not wish to live under Communist or 
KMT control, and was unwilling to take part in activities 
against either for fear of retaliation, not only from the 
two extremes but also from the Hong Kong Government which 
was trying to walk a very tight rope to avoid Communist 
action against the colony. 

The Chinese Communists controlled most of the Chinese 
economy in Hong Kong and, of course, the trade back and 
forth across the border was considerable. They controlled 
the Bank of China, which was housed in an imposing edifice 
carefully constructed to be slightly taller than the^larg- 
est British-controlled office building on Victoria Island. 
Their control over propaganda media wa§ very considerable ; 
they were prepared to take action against opposition in 


Hong Kong. 

The Chinese Nationalists had numerous agents in Hong 
Kong, but had little popular support for organized public 
activities directed against the Communists. 

Another probable cause for. the decreasing effective- 
ness of the 

He was not replaced by any officer 

of similar experience and energy. Despite his short- 

comings , the goo 


during the time he was in Hong Kong. 

far overshadowed the bad 

The Korean War 

With the fall of mainland China, to all intents and 
purposes at the beginning of the year 1950, CAT operations 
became severely restricted and the flight time fell off to 

*At a much later date Cox accidentally encountered 
in Washington and, although aware that Headquarters dis- 
couraged any further contact with him, could not very well 
refuse an invitation to lunch at his apartment. Cox noted 

that the apartment was completely flooded with_ Banuahleis 

and tra c ts o f an extremely rightwing nature . 

had testified before the House Un-American 

Activities Committee in 1954. ) Although consideration was 

given to interviewing 

on his Hong Kong activities, 

it was decided that this might only serve to re-open -old 

wounds and possibly result in damaging action by[ 
with regard to his Agency activities. Therefore no inter- 
view was arranged. 


approximately 400 flying hours per month. For reasons of 
economy, it was necessary to release a substantial number 
of personnel, particularly affecting the number of flight 
crews available. All American personnel, however, were 
told to regard themselves as on leave without pay and were 
requested to keep CAT advised of their whereabouts so that 
they could be quickly contacted in the event that CAT oper! 
tions expanded. 

During the period prior to the beginning of the Koreai 
conflict, the OPC representatives were kepi 

busy establishing propaganda activities, developing con- 
tacts as possible sources for intelligence and later guer- 
rilla action on the mainland, and following out other 
actions as requested and approved by Headquarters. All 
during this period the CNAC/CATC litigation was being 
pursued in the Hong Kong courts. 

Early on the morning of 25 June 1950 (Far East time), 
word was received in Hong Kong that the North Koreans had 
begun to invade South Korea. The writer met with Chennault 
at Kai-tak Airport in Hong Kong at 7 a.m., and a cable signe 
by Chennault was sent to General Douglas MacArthur offering 
immediately the full use of all CAT facilities against the 
North Koreans. General MacArthur replied several days 
later that the offer was appreciated, but adequate airlift 
was on hand to cope with the situation. 


was hurriedl: 

During this period 
beefed up. It originally had consisted of a Chief of Sta- 
tion, now deceased, one administrative 

assistant/secretary and a cleared consultant. Immediately 

after the start of the conflict 

in touch with them to insure that they understood the air 
support capability that CAT had to offer. They had to 
start from scratch. Initially, therefore, they had little 
need for air support . 

In the first week of September 1950, Willauer and 
Cox were asked to come to Tokyo as rapidly as possible. 

En route to Tokyo from Hong Kong, they picked up Mr. C. 
Joseph Rosbert, the Director of Operations, and Capt. 
Robert E. Rousselot, the chief pilot, in Taipei. Senior 
officers of the Far East Air Force (FEAF) told Willauer 
that they urgently required every bit of airlift CAT 
could provide. The urgency was so great that they told 
him to prepare an estimate on which a contract could be 
based as. soon as possible and, if necessary, it would be 
readjusted at a later date. 

FEAF advised that they would provide fuel, that the 

S E 

E T 

CAT airlift would be based at Tachikawa (a FEAF air base) , 
that facilities for CAT crews, including PX and Commissar] 
facilities, would be provided by the Air Force, but that 
they could not furnish billeting at Tachikawa. In coming 
up with an estimate of cost per flying hour, the fact that 
fuel would be furnished by the Air Force should be taken 
into account. They also indicated that spare parts, as 
required and if available, would be provided from Air 
Force stocks and that every assistance possible would 
be given in the maintenance of the aircraft. 

After some hurried calculations, to a certain extent 
taking figures out of the air but based on CAT experience, 
a contract was drawn up providing for reimbursement at 

per flying hour. The contract also contained provi- 
sions for indemnification for loss. The Air Force indi- 
cated that the contract was acceptable to them, and that 
they could use every bit of airlift that was made availabl 
In the meantime, cables had gone out to all the 
air crews and some of the American maintenance person- 
nel who had been placed on leave without pay to ascer- 
tain whether they were still available and willing 
to return to the Far East, They were requested to re- 
ply either to the CAT Washington office or directly, 
to CAT in Taipei. A surprising number of personnel 

quickly responded. Within less than two months CAT had 
rebuilt its capabilities from the 400 flying hours per 
month noted previously to close to 4,000 hours per month. 

It was somewhat disturbing to CAT personnel involved 
when the Air Force quietly advised that things would go 
more smoothly all around if Chennault did not come to 
Tokyo, at least at that time. It was apparent that 
General MacArthur did not want to welcome any other 
stars into his firmament. 

This Air Force contract, which was known as 
BOOKLIFT, in addition to being a godsend for rebuild- 
ing the operational capability of CAT, 

From time to time, the contract was re-negotiated 
with the Air Force auditors. This presented certain 
difficulties in that the auditors were not cleared, 
were hot aware of the true ownership of the airline, 
and were not briefed on the flights in support of OPC 
operations. However, on such OPC support flights, OPC 
itself was billed rather than the Air Force so that 
activity did not unnecessarily complicate the picture. 

bulk, were flown by the USAF, but on a number of 
occasions, particularly after the cease-fire, CAT was 
called upon to operate also. 

It was evident very early in the BOOKLIFT oper- ' 
ation that there would be increasing difficulties with 
the Japanese Government over CAT flying aircraft with 
Chinese Nationalist markings and with personnel carried 
as employees of a Chinese company. Very quickly a 
Delaware corporation was established, planes were 
registered as American-certificated aircraft, and the 
personnel assigned to Tachikawa, including the flight 
crews, were ostensibly picked up by this new American 
corporation. Every effort was made to keep both 
companies as separate as possible, both on the books 
and in their activities, so as to run a minimum risk of 
interference by both the Japanese Government and pos- 
sibly by the Chinese Nationalist Government . The latter 
could conceivably complain that the transfer of the 
aircraft had been made without approval of the Chinese 
Civil Aviation authorities and the Minister of Com- 
munications. It was a device which probably would not 
have stood up if either country had chosen to make it 
an issue. The Japanese Government, still under the 
control of Supreme Commander Allied Pacific (SCAP) , 


was not in a position really to make any trouble, and 
the Chinese Nationalist Government did not elect to 
raise any unnecessary objections. 

The FEAF engineering and maintenance facilities 
were very badly overloaded. For this reason CAT invited 
the Air Force to send an inspection team to Tainan to 
inspect the CAT engineering and maintenance facilities. 
The team was quite impressed and made a favorable report. 
An initial contract for engineering overhaul was worked 
out with the Air Force and, as the CAT output measured 
up in all respects to Air Force requirements and 
standards, the volume of business generated through the 
engineering and maintenance facilities at Tainan greatly 
expanded and became an important factor in the financial 
status of the airline. 

In mid-September the UN forces began to move north- 
ward and Pyong-Yang, the North Korean capital, was taken 
on 20 October. The advance northward continued and on 
20 November the U.S. 7th Division reached the Manchurian 
border . 

On 26 November, 200,000 Chinese Communist "volun- 
teers" crossed the Yalu River to launch a counteT- 
attaclc. The Chinese caught the UN forces overextended 
and they were forced to fall back, suffering heavy 


losses on both sides of the Peninsula. 

Shortly after the entry of the Chinese Communists 
into the war, Col. Richard G. Stilwell, DC/FE, arrived 
in the Far East on a tour of the various OPC instal- 
lations. Cox accompanied Stilwell to Seoul and, after 
spending the night the 

two departed in a jeep along the highway running north 
from that city. Colonel Stilwell was anxious, if 
possible, to call on Major General Garrison H. Davidson 
who commanded the 7th Division. The command post was 
located without too much trouble, as it was just a 
short distance off the main highway. As an illustra- 
tion of how exhausted the troops were because of their 
rapid withdrawal south from the Yalu (they were under 
constant flank assault and heavy pressure by the ChiComs 
who were infiltrating far down into South Korea), entry 
was made into the command post without challenge. The 
General's command van was located, and much to the 
General's surprise, Stilwell and Cox walked in and woke 
him up . 

After a briefing, Stilwell and Cox returned to 
Seoul where they were advised by Captain Rousselot 
that a CAT aircraft had had engine trouble at Hungnam, 
the major port of embarkation for the troops and 



civilians who were being evacuated from the east coast 
of Korea. It was determined that the plane could not 
be repaired in time, so it was stripped and burned. 

In January 1951 Cox was called back to Headquarters 
and informed by Mr. Wisner that OPC wanted to move forwar 
as rapidly as possible on three projects. These were: 

S E''€L R E T 

The reason for pushing as rapidly as possible on 
these projects was, of course, to force the Chinese Com- 
munists to drain forces from the Korean conflict in the 
north in order to meet threats elsewhere. 

A start had been made on all three projects but 
there had been no implementation of actual operations 
on an approach had been made to the General- 

issimo advising that wealthy American interests were 
prepared to assist by providing training instructors 
for the development of a ChiNat unconventional warfare 
capability (Tab C, Volume III). 

the OPC representatives in CAT had 

been working with Third Force leaders, at that time 
largely for the procurement of intelligence since no 
operations had yet been approved (Tab D, Volume III). 

Cox was informed that he would be given briefings 
on the spot 

and that 

he and Chennault should begin to work 
the ChiNat Government, making at least preliminary 
arrangements for billeting Americans, for training 
areas, warehouses, etc., pending the arrival of U.S. 


s"e>SJR E T 

personnel who would be assigned full time to the task. 
Chinese volunteers 

would have to be 

found, recruited, cleared, and moved out of Hong Kong 
to whatever training base might be established. A 
Third Force political movement that had some credibility 
and capability would have to be devised and developed. 

Cox immediately returned by way of Europe and 
South Asia, 

For many 

months thereafter almost continuous, travel was required, 
first to get the projects going and then, after addi- 
tional American personnel came to the field, turning 
command of the project over to them but continuing in 
a support role. 

of separate historical papers. In order to avoid 
unnecessary duplication, therefore, the tabs noted 
above will concern themselves solely with the support 
provided by CAT to the three projects. 


Many of the activities conducted under CAT cover 


were highly specialized and can best be presented as 
separate histories. In order to keep the first volume 
of the history at a reasonable length, many of these 
activities have been written up separately and will b'e 
included in Volume III as annexes. The reader can then 
choose his reading according to his interests. These 
annexes include: 





The Pickup Operation 
An unsuccessful attempt to snatch 
an Agency Chinese agent by a CAT 
aircraft in Southern Manchuria. 
Indochina - Limited Victory in 1953 - 
Dien Bien Phu and Disaster in 1954 
The provision by CAT, on a crash basis, 
of pilots to operate C-119 aircraft 
provided by the U.S. Air Force to 
the French Air Force in Indochina. 

The Cathay-Pacific (CPA) Incident 
The shooting down of a Cathay-Pacific 
aircraft by Chinese MiG's just south 
of Hainan Island. 


CAT International and Domestic 

Operations - Scheduled and Non- 


A description of the various routes 
travelled by CAT together with a 
report on some of their unscheduled 

charter activities. 

Engineering and Maintenance 

m ‘ ***' 

A description of how CAT handled their 
complicated maintenance problems in the 
face of numerous forced evacuations on 


S E C\R E T 

the mainland, with emphasis on the 
utilization of an LST and a supply 
barge . 

TAB Q CAT - Personnel and Training 

A brief account of the airline’s 
hiring practices, training programs, 
related pay scales, and incipient 
labor problems. 


As the Chinese Communists steadily advanced during 
the summer and fall of 1949, they made every effort to 
secure defections from the three Chinese airlines, CAT, 
the Chinese National Aviation Corporation (CNAC) and 
the Central Air Transport Corporation (CATC) . CNAC was 
80 percent owned by the Nationalist Chinese Government, 
with Pan American Airways holding the remaining 20 
percent . CATC was 100 percent owned by the Nationalist 
Chinese Government. Any sizable defection from CAT 
would, of course, have been a tremendous propaganda 
victory for the Chinese Communists because of its 
American ownership. 

These attempts toward defection were well known 
and every effort was made by the security department 
of CAT to insure against them. In order to keep the 
assets of the other two airlines from falling into the 
hands of the Communists, the Nationalist Chinese 
Government had ordered removed to Hong Kong all equip- 
ment, assets, records, etc. 

On 9 November 1949, 11 CNAC and CATC aircraft 
took off from Kai-tak Airport in Hong Kong and 
defected to Communist-held airports. At the same time 
CAT received word that several aircraft located 

upcountry on the mainland had also defected to the Com- 
munists. Fortunately at that time, there was a con- 
siderable number of CAT personnel in Hong Kong. They 
were rushed out to the airport and by physical inter- 
vention, including driving trucks on the runways, 
further defections of aircraft were obstructed. The 
Hong Kong police quickly restored order and froze all 
of the CNAC and CATC assets in the Colony, pending a 
legal decision as to who were the proper owners of the 
assets . 

Headquarters was asked to approve whatever OPC 
actions might be required to deny the assets of the two 
airlines to the Chinese Communists. Headquarters 
replied that while every assistance should be given to 
Chennault and Willauer in order to make effective such 
a denial, it was not felt that as of that time such 
actions were proper undertakings fox OPC. 

Chennault and Willauer were almost immediately 
contacted by Generalissimo Chiang Kai-shek, who 
requested that they give every assistance in denying 
the Hong Kong assets to the Communists, On 16 November 
Ango Tai, an employee of CATC who had remained loyal, 
was appointed by the ChiNat Government as acting 
president of CATC. On 16 November, Ango Tai dismissed 


the defecting employees and appointed Mr. William Parker 
chief of security of CAT, to be concurrently chief of 
security of CATC. On the next day Parker appeared at 
the airport with 75 special guards and with police 
approval to post them around the aircraft. A few days 
later, however, the Commissioner of Police informed 
Parker that the guards must be withdrawn. 

Proceedings were then begun in the Supreme Court, 
and on 25 November Chief Justice Sir Lesley Gibson 
granted an interim injunction prohibiting the defect- 
ing employees from entering or remaining on CATC 
premises or from removing or tampering with CATC 
property. Similar actions were undertaken with regard 
to CNAC assets . 

After hurried consultations with the Chinese 
Nationalist Ministry of Communications and other 
offices of the Nationalist Government, it was agreed 
that Chennault and Willauer would prepare an offer to 
purchase all of the government-held interest in CNAC/ 
CATC.' This letter was prepared, but it became obvious 
that the Minister of Communications, Tuan Mo Chieh, 
was dragging his feet on the matter, and apprehension 
was felt that British recognition of Communist China 
might be made before the letter of acceptance had been 


signed by the Nationalist Government. Once the 
were recognized by the British Government, any claim 
that the Nationalist Government might try to put forward 
would, of course, be hopeless. 

On 5 December Chennault and Willauer sent an urgent 
cable to the Generalissimo, who at the time was at 
Cheng-tu, advising of the extreme urgency, and flatly 
stating that they questioned the good intentions of 
the Minister of Communications. It noted that the 
Nationalist Government had two alternatives: 

a. To order the Minister of Communications 
to sign the letter of acceptance from the 
Nationalist Government, or 

b. For the Executive Yuan to take action 
directly on the matter. 

The apprehensions of Chennault and Willauer were 
confirmed when the Minister of Communications went from 
Taipei to Hong Kong without having signed the letter 
of acceptance. 

On 11 December the Executive Yuan of the National- 
ist Government designated Premier Yen Shi-shan as 
temporary Minister of Communications. Premier Ven 
then immediately designated one Liu Shao-ting as 
chairman of the Board of Governors of CATC and one 


Nih Chung-sung as chairman of the Board of Directors of 
CNAC. The letter of acceptance, together with the 
promissory notes and the bills of sale, was signed by 
Nih Chung-sung on 13 December 1949 and by Liu Shao-ting 
on 12 December 1949. 

Under the terms of the letter and offer of accept- 
ance, Chennault and Willauer purchased all of the assets 
of CATC for $1,500,000, issuing three joint promissory 
notes in the sum of $500,000 each, payable without 
interest. They purchased 80 percent of all of the 
assets of CNAC for $2,000,000 payable in joint promissory 
notes, one in the sum of $600,000 and two for $700,000 
each . 

In order to insure that the purchase of CNAC was 
legally binding, it was necessary to buy out the 20 
percent interest from Pan American Airways. Pan Am 
refused to cooperate in the matter and indicated that 
they would retain their interest unless paid off in the 
amount of $1,250,000. Through the intervention of T.V. 
Soong,' the Nationalist Government advanced the 
$1,250,000, and on 4 January 1956 notified the British 
Government and the Hong Kong Government that the 20 
percent interest formerly owned by Pan American Airways 
had been purchased and transferred to Chennault and 

3 E V*ET 

Willauer . 

For legal purposes, Chennault and Willauer decided 
that it was preferable to have the assets held by a 
corporation rather than by a partnership. Therefore, a 
Delaware corporation, Civil Air Transport, Inc, (CATI), 
was formed, and all of the interests held by Chennault 
and Willauer were transferred to this corporation in 
consideration of notes for $3,900,000. This transaction 
occurred on 19 December 1949. The 20 percent Pan 
American interest was also transferred into CATI. 

The Nationalist Government was deeply concerned 

over the pending litigation. Foreign Minister George 

Yeh told Chennault and Willauer that the government 

wished to employ top American legal talent to represent 

its interests in preserving these assets. Mr. Corcoran's 

office in Washington then approached the firm of Donovan, 

Leisure, Newton and Lombard to ascertain whether they 

would undertake the case. OPC was queried at .the time 

as to whether there would be any objections to the selec- 


tion of General Donovan's firm. The OPC response was 
that ' this was perfectly satisfactory, but that General 
Donovan’s firm should be employed and paid by the 
Chinese Nationalist Government. The memorandum -to the 
Director referenced above made it clear that OPC was 
maintaining a position which it had taken at the time of 


the defection; namely, that it would assist where pos- 
sible, but that it would not become involved unless the 
situation changed to one that would fall within the 
scope of OPC activity; unless specifically requested by 
the Department of State and/or Department of Defense, 
no action would be taken by OPC. 

The Donovan firm immediately dispatched Mr. Richard 
Heppner and Mr. Mahlon Perkins to Hong Kong to commence 
preparations for the upcoming court actions. A short 
time thereafter Donovan came out to Hong Kong and spent 
a few days in order to insure that matters were progress- 
ing properly and to familiarize himself with the situ- 
ation on the ground. 

One of the most pressing and important tasks that 
had to be accomplished was to secure American regis- 
tration for all of the aircraft that were involved. 

Since the records which would be required in order to 
secure such registration were not readily available, 
it was necessary to bribe a number of the defected 
employees in order to get access to the aircraft and to 
obtain the necessary information. As rapidly as pos- 
sible this information, was secured and passed on 'to'"' 
Washington. Pressure had to be brought to bear upon the 
CAA in order to obtain the necessary registration since 

v 101 

S r r\ No T' rrs 

XU L* iVv -a 

it was not possible for the CAA physically to inspect 
the aircraft in question. However, the aircraft were 
all under American registration at the time of British 
recognition of the Chinese Communist Government, which 
was at midnight of 5-6 January 1950. 

On 21 December 1949, the Hong Kong courts had 
granted an injunction against any tampering with or 
removal of the CNAC/CATC assets in the Colony by either 
party, but the Chinese Communists were permitted to 
remain in physical possession of the assets, including 
those assets located on the airfield and other assets in 
warehouses and offices elsewhere in the Colony. By an 
Order in Council, dated 10 May 1950, the' Governor of 
Hong Kong was directed to maintain complete control of 
all assets until he was satisfied that ownership or 
right to possession of the assets had been finally 
determined. Technically this meant that all of the 
assets should have been placed under British juris- 
diction. However, the Hong Kong Government again per- 
mitted the Chinese Communists to remain in physical 

possession. This was noted by the Privy Council at a 

later date* — 

Although OPC had decided against active partici- 
pation in this litigation, it had instructed the OPC 

\ 102 

S T? 

o v *r 

representatives in CAT to assist and encourage ChennaUlt 
and Willauer in their efforts. The Chinese Communists, 
having physical possession of the assets, were in a 
position to smuggle valuable parts out of the Colony and 
to damage the assets should there be an adverse legal 
decision. It was, therefore, necessary for Chennault 
and Willauer to take extraordinary precautions against 
such measures. The OPC representatives assisted in 
organizing a guard force to insure against such activ- 
ities on the part of the Chinese Communists. This force, 
of course, had no legal status insofar as the British 
police were concerned, but fortunately, through Parker's 
excellent relationship with the police, the force was 
generally effective in preventing large-scale smuggling 
activities. Parker's British citizenship and the 
probability that he was at least an informant for the 
Hong Kong police represented cause for concern with 
regard to OPC operations; however, with regard to this 
particular affair, the CNAC/CATC litigation, there is 
no doubt that he was effective and helpful. 

At the time CAT was desperately short of funds and, 
from time to time, it was necessary for Cox and Head- 
quarters to make cash advances in order to pay guards, 
and for legal and other expenses attendant upon the 

preparation of the legal case and for the protection of 
the assets. Most, if not all, of these advances were 
either authorized by Headquarters if the request could 
be made in time, or later approved by Headquarters after 
the reason for the advance had been explained. 

In order to appear before the Hong Kong courts, it 
was necessary to secure the services of a Hong Kong law 
firm. The firm of Wilkinson and Grist was retained for 
this purpose. Later Sir Walter Monckton, a prominent 
barrister and a member of the Conservative Party in 
England, was also retained. As an illustration of the 
high order of legal assistance that was obtained for 
this litigation, when the Labor Government was over- 
thrown and the Conservatives came into power, Sir Walter 
Monckton replaced Sir Hartley Shawcross as Solicitor 
General. Sir Hartley's services were then retained to 
replace those of Sir Walter, particularly for the presen- 
tation of the appeal before the Privy Council. 

To summarize briefly the successive court actions, 
on 19 May 1950 CATI issued a writ in the Supreme Court 
in Hong Kong against CATC, claiming that the CATC 
assets within the jurisdiction of the Hong Kong courts 
were the property of CAT. The action was tried before 
the Chief Justice of Kong Kong on 27 and 28 March 1951, 


and on 21 May 1951 the judge delivered a reserved 
judgment denying the claim and directing that any 
appeal be brought within two months. An appeal was 
promptly filed and the appeal was heard by the full 
Hong Kong Supreme Court on 21 and 22 August 1951. On 
28 December 1951, the full court dismissed the appeal. 
Permission was immediately requested to appeal the 
decision to the Privy Council and this was granted. On 
28 July 1952 the Privy Council reached the verdict that 
the appeal be allowed and so advised Her Majesty, and 
on the following day an Order in Council allowing the 
appeal was made. 

It should be noted that, although initially CATI 
lawyers attempted to combine the CNAC/ CATC litigation 
in one package, the Hong Kong court had decided that 
the two cases should be tried separately and directed 
that the CATC case should be heard first. The CNAC 
litigation was, therefore, held in abeyance throughout 
this period, pending the final decision with regard to 
CATC.' When the final CATI appeal on the CATC case was 
upheld at the highest level that could be resorted to in 
the British judicial system, the Privy Council being' 
roughly equivalent to our Supreme Court, the CNAC 
litigation went practically by default and no further 

extensive litigation was required. 

Among the CNAC/CATC assets which were sold to 
Chennault and Willauer and then CATI were cash .deposits 
in California banks and a large supply of spare parts. 
The Chinese Communists laid claim to these assets 
through their agents and attorneys in the United States. 
OPC advanced funds for the legal action to block the 
Communist claims and recover these assets, with the 
understanding that in the event of recovery these 
advances, together with advances made to support the 
Hong Kong legal activity, would be fully reimbursed to 
the Agency. A favorable judgment for CATI was received 
on 1 December 1950, covering $1,310,000 in bank deposits 
and aircraft spare parts valued at $250,000. Financial 
reimbursement to the Agenty for funds advanced was 

On the evening of 28 July 1952, the Hong Kong 
authorities advised CAT and CATI of the forthcoming 
proclamation of a favorable decision of the Privy 
Council, and further advised that Hong Kong authorities 
intended to remove the Chinese Communists who were in 
possession of the physical assets and who were camped' on 
the airfield and in the other various properties, such 
as the Bailey's Shipyard and the airline offices. 


S e'VnH E T 

Brennan, Rosbert and Cox quickly met at Brennan's apart- 
ment. It was decided that' Brennan would remain there 
near the telephone, while Rosbert and Cox went out to 
the airfield to observe the actual police takeover. The 
two drove out to Kai-tak Airport and crouched in a ditch 
just outside the fence surrounding the airfield. At 
about 3 a.m, police moved in very swiftly. They were 
prepared for resistance, carrying their bamboo shields 
and wearing helmets. The Chinese Communists encamped 
at the airfield, as well as at the other installations, 
were literally caught with their pants down. The whole 
action took less than ten minutes, and the ChiComs were 
quickly escorted out of the various locations. Rosbert 
and Cox remained at the airfield until dawn in order to 
observe whether or not the ChiComs would organize any 
kind of a counteraction, but none was forthcoming. The 
Commissioner of Police, Mr. McIntosh, stressed the fact 
that CATI must act as rapidly as possible in order to 
remove the assets from the Colony, because as long as 
they remained there it would be an open temptation to 
the ChiComs to take some kind of sabotage or other action 
against the assets. 

Up to this point, this section of the paper has con- 
cerned itself with the CNAC/CATC litigation as observed 


by and participated in by CAT in the field. With the 
favorable decision of the Privy Council on the appeal, 

CAT participation became, as requested, largely that of 
providing technical assistance to CATI in their efforts 
to evacuate the assets from Hong Kong. The emphasis on 
further activity was largely concerned with negotia- 
tions between CIA Headquarters and CATI management in 
Washington. The files on these negotiations are 
voluminous, and since CAT was not directly concerned no 
attempt will be made to cover them in detail, but rather 
to quickly point out the high spots of what was going on 
in Washington. 

It has been previously noted that at the time 
of the defection the field had urged OPC to take whatever 
actions might be required to deny the assets of the two 
airlines to the ChiComs. Headquarters replied, that 
while every assistance should be given to Chennault and 
Willauer, it was not felt at the time that it was a 
proper undertaking for OPC. On 9 December 1949, ADPC, 
in a memorandum to the DCI , provided him with a situa- 
tion report regarding the CNAC/CATC assets in Hong Kong 
and the extent of OPC participation in the effort's to 
deny the assets to the Communists . OPC had consulted 
on the situation with the Department of State and the 

S 5k C RET 

Department of Defense, suggesting that action be taken 
with a view to preserving the equipment. The Depart- 
ment of State expressed concern over the matter to the 
British Embassy in Washington, but no answer had, as of 
the date of the memo, been received from the British. 

The DCI was advised of the hiring by CATI for 
counsel of the firm of Donovan, Leisure, Newton and 
Lombard, who had accepted the case,- At that time the 
OPC representatives in the field queried Headquarters 
as to whether or not this had been arranged by Head- 
quarters. They were advised by cable on 7 December 
1949 that this had not been arranged by OPC Washington, 
but that the office was aware of the arrangement. It ■ 
was then suggested that the OPC communications link be 
utilized for the transfer of the necessary funds for 
payment of the fee. OPC Headquarters again replied 
that since the transfer action was one entirely between 
the Chinese Government and CATI attorneys, OPC should 
in no way be involved, and the payment should be made 
through regular commercial and banking channels. 

The DCI was further advised that the position, 
insofar as OPC was concerned, was that unless the situ- 
ation took a turn which brought the case within the 
scope of OPC activity, and unless specifically requested 


S E T 

by the Department of State and/or Defense to become 
involved, no action would be undertaken apart from 
keeping State and Defense advised as to further 
developments .— 

In a briefing memorandum prepared for Mr. Wisner 
on 29 July 1952, it was noted that at a meeting on 
13 March 1950, attended by the deputies of the Chiefs 
of Staff and by members of the NSC senior staff, it 
was stated to be in the national interest for CIA to 
contribute to the support of the litigation of the 
CNAC and CATC cases on a carefully negotiated and 
reasonable basis . As a result of this statement it 
was felt that the Agency had been authorized to advance 
funds to CATI for litigation expenses in the field and 
in the States against the assets in California. With 
this authorization, such funds were advanced. With the 
successful acquisition of the bank accounts and inven- 
tory in California, the Agency was reimbursed for the 
funds thus far advanced. 

With the outbreak of the Korean War in June 1950 
and the subsequent entrance of the Chinese Communists 
into the conflict, the denial of the assets in Hong "" 
Kong to the Chinese Communists became of significant 
importance to the U.S. Government as a whole and, in 


S E\E E T 

particular, to CIA. The files indicate increasing 
interest by CIA in the litigation, and a gradual feel- 
ing on the part of at least certain officers in the 
Agency that because of the assistance rendered in the 
litigation and the political pressures which were be- 
ing brought to bear on the British for a favorable 
decision, there were vested in CIA certain rights with 
regard to the ultimate disposition of the assets in 
the event a favorable decision was made. From time to 
time there was recognition in the flow of memoranda 
that in the event of such a decision CATI was the true 
owner, and although CATI would be susceptible to CIA 
influence, there were no vested rights in CIA as long 
as any funds that were advanced to CATI were reimbursed. 

At the time of the purchase of the CNAC/CATC Air- 
lines by CATI in late 1949, the two airlines had assets 
on Taiwan consisting of five C-46 aircraft, over 50 
vehicles of all types, communications equipment of sub- 
stantial value, certain real estate leaseholds, and 
freeholds; they also had operating franchises and 
rights in Japan and elsewhere . CATI was not in a 
position to take possession of or safeguard the prop- 
erty or to operate under any of the franchises. 


On 19 April 1950, CAT and CATI entered into an 
agreement under which the five C-46 aircraft were sold 
to CAT in consideration of the advancements, disburse- 
ments, and services made to date by CAT on CATI's 
behalf . 

CATI agreed to charter and lease to CAT, until 
further notice and without rent, charter, hire or com- 
pensation, all of the miscellaneous operating equipment, 
including the vehicles, communications equipment and 
the hostels, and CAT would be permitted to operate 
under the franchises, landing permits, and other oper- 
ating rights acquired by CATI. CAT agreed to use its 
best efforts to maintain, safeguard, and protect from 
loss or deterioration all of the property so leased, 
and would pay all costs and expenses incurred on 
account of the use, operation, maintenance, and safe- 
guarding of assets, including all costs and expenses 
required to preserve and keep alive the franchises and 
operating rights. It was estimated that these assets 

properly depreciated and including the franchises and 


operating rights were worth not less than $250,000. 

The assets inventory acquired by CATI through the 
successful court decision in California had an esti- 
mated value of approximately $225,000. A large part 

S E CkR E T 

of the inventory consisted of DC-4 parts and aircraft 
overhaul equipment. Willauer, as president of CAT, 
and envisioning that CAT would be expanding into four- 
engine equipment, arranged for CAT to purchase from 
CATI the entire inventory. 

During the early spring of 1951, the Agency decided 
to cut back on the CAT operation to a more economical 
and manageable size. At a meeting with Willauer and 
Brennan on 14 May 1951, the nature of this cutback was 
explained, and it became apparent that any plans for 
obtaining four-engine equipment were not envisioned at 
that time. At this meeting Willauer said that he 
understood there was concern over the fact that he had 
arranged a purchase by CAT of the CATI assets, and he 
also said that he had actually abused his fiduciary 
position as a protector of the interests of the 
holders of the CATI notes in selling these parts at 
their original list price. The increased true value 
of these parts was substantial, and therefore CATI was 
losing a just return. He felt he could no longer take 
such a position, and that, if possible, he would cancel 
the purchase arrangements and undo the old agreement'; 

He felt that this eventually would mean a considerable 



loss to CAT, which at a later date would be forced to 

procure the necessary parts on the open market at 

inflated costs. — 

Apparently no progress was made with regard to the 
reduction of the contract, so that CAT would purchase 
only those parts which were required for the mainte- 
nance of the reduced fleet . It was estimated that the 
total value of such parts would be approximately 
$70,000. On 28 November 1951, a number of senior CAT 
officials met with Mr. Brackley Shaw, the counsel for 

CAT, to discuss the problem 1 MrJ 

Special Assistant for Inspection for OPC, stated that 
the purpose of the meeting was to discuss whether 
there was any liability or contract for the purchase 
of these parts by CAT from CATI, and what further 
action should be taken with reference to the property 
which was purchased, if there was such a valid contract. 
The memorandum for the record on the meeting indicates 
that there was also submitted at that time a separate 
document (Tab A) containing a chronological recita- 
tion of the facts concerning the negotiations on the 
subject and another written statement (Tab B) of* 
questions prepared by Mr. which would be dis- 

cussed at the meeting. Unfortunately neither Tab A 

nor Tab B is available, but the rather lengthy memo- 
randum lor the record does give a pretty good estimate 
as to the content of each Tab. All of the questions 

were discussed, and the con- 

prepared by Mr 

sensus of the meeting appeared to be that there was a 
valid contract for the purchase of all of the CATI air- 
craft parts, engines, and other equipment, based on 
the chronological record of the facts concerning the 
negotiations. The memorandum for the record does not 

indicate that any agreement was reached on any definitive 


recommendation for action. 

However, on 30 November 1951, a draft agreement 
was prepared which provided that CAT would agree to 
purchase certain aircraft parts and equipment with a 
total inventory value of approximately $67,000. In 
addition, CAT could undertake to sell all the remain- 
ing CATI inventories, acting as an agent of CATI. 

There is no indication that this draft agreement was 

ever placed in final form or that it was ever accept- 

able to CATI . — 

On 6 February several Agency officials met with 
Corcoran at his office to discuss various matters in 
connection with the accounting as between CAT and CATI. 
The last sentence of the last paragraph of the memorandum 


s eXr e t 

for the record states rather cursorily the following: 

"He /Corcoran7 did mention the fact 

that he paid out $500,000 to the bank of 

Taiwan at the request of Willauer (in pseudo) 

presumably to protect our interest during the 


franchise negotiations state." 

Apparently the Agency did not realize the incon- 
gruity of this at the time. In point of fact, this 
payment to the bank of Taiwan was to create several 
problems of great magnitude for CAT. The Nationalist 
Government was enraged that funds which had been 
recovered by CATI from the CNAC/CATC bank accounts in 
California had not been applied against the notes held 
by the Nationalist Government covering the purchase by 
CATI of CNAC and CATC, notes which aggregated several 
million dollars and also included the $1,250,000 
advanced by the Nationalist Government to purchase 
the Pan American interest in CNAC. Also, the franchise 
operating rights under which CAT operated were vested 
in them by the Nationalist Government and not by the 
Government of Taiwan. These problems will be dis- 
cussed more fully in Volume II, Part I, CAT - Manage- 
ment, Legal, Fiscal and Accounting Aspects of this 


On 28 January 1952, the General Counsel wrote to 
the DD/P with regard to a meeting he had held with 
Mr. U. Alexis Johnson, Deputy Assistant Secretary of 
State for Far Eastern. Affairs, and Mr. Krentz of the 
State Policy Planning Staff. Certain points had been 
raised with regard to the appeal to the Privy Council 
which CATI was preparing as a result of the unfavorable 
decision on the CATC case in the Hong Kong courts . The 
General Counsel desired to discuss with the DD/P and 
OPC/FE the major points raised by Mr. Johnson, These 
points together with a brief summary of the General 
Counsel's views on each point were as follows: 

"a. Do we wish to expedite or delay the 

CATI will undoubtedly be anxious to 
have the appeal heard at the earliest possible 
moment as the CNAC case must wait upon it. 

However, CIA's primary interest is denial of 
the planes to the Communist Chinese and not a 
positive desire to obtain a favorable decision 
for CATI. Judgment for CATI would create a 
wholly new series of problems due to the dual ' " 
role filled by Chennault and Willauer and pos- 
sibly create another denial problem. The longer 

the planes lie in limbo, the fewer the problems 
we are faced with, unless prepared to take over 
the planes in the event of a favorable judgment. 
On the whole, the General Counsel favored delay- 
ing action and believed it could be accomplished 
with the cooperation of the State Department. He 
suggested that the Privy Council might decide it 
would not hear the appeal on the CATC planes 
until the CNAC case had proceeded through the 
Hong Kong courts . 

"b, A related problem is what result do we 
desire in the Privy Council?" 

We do not wish judgment for the Com- 
munist Chinese. The General Counsel is not 
aware of a precise Agency position on whether 
CIA actively desired judgment for the plaintiff. 
If CATI gets good title to the aircraft they 
might try to repair and operate them. This would 
complicate the CAT franchise picture and 
establish a competitor for CAT.. CATI might 
determine to sell the planes to the highest 
bidder, which would almost certainly be the 
Communist Chinese. A deal might be made with 
the Chinese Nationalists and the planes once 


S E 

E T 

more run as a Chinese company, thus liquidating 
CATI’s obligation on the aircraft. Once again 
it might be desirable for the planes to lie 
idle in Hong Kong until no longer repairable. 

"c. In the event final judgment is given 
to the plaintiffs, have we a concrete plan to 
cope with the ensuing problems?" 

A knowledge of CATI's intentions with 
regard to the disposition or utilization of the 
aircraft is required. The Chinese Nationalists 
will be looking to CATI for settlement of the 
notes they hold against the CATC assets. As a 
last resort, CIA might be forced to purchase the 
assets in order to deny them to other purchasers 
At least we would be in a position to have infor 
mation on the assets, their condition, repair- 
ability, and the flyability of the planes that 
was so sadly lacking when the Agency bought CAT. 

"d. In the event of judgment on behalf of 
the Communist Chinese, Mr. Johnson asked if we 
had a current and concrete plan for sabotage of 
the planes or for denying them to the Communist's 
by other means . " 



Mr . Johnson appeared to be fully in 
favor of sabotage as a last resort but was con- 
cerned with the international repercussions that 
might result if this was accomplished. The 
ChiComs could move the planes to Shanghai by 
water. This would present opportunities for 
sabotage. State suggested that the case might 
be referred to the United Nations for submission 
to the International Court on the same basis as 
that requested by the British in the Anglo- 
Iranian oil situation. This point should be 

thoroughly studied as such a move would probably 


tie up the planes indefinitely. 

In a memorandum, dated 3 July 1952, the Inspector 
General discussed the problem of what to do if a 
favorable decision was received from the Privy Council 
on the CATI appeal in the CATC case. The possi- 
bilities were listed as follows: 

1. Sabotage the planes, but not to be 
done if the appeal is won, and only as a last 
resort if lost. 

2. To advise or, assist in moving the - 
planes to Taiwan, where CAT. has the best and 



cheapest repair center in Asia. However, if 
this were done the Chinese would almost surely 
grab them and use them to compete with CAT. 

3. Repair at Hong Kong by JAMCO (a British 
owned air maintenance facility) . The second 
cheapest way for rehabilitation, , but probably 
too dangerous because of the possibilities of 
sabotage by the ChiComs. 

4. Advise or assist in moving the planes 
to Japan or to the Philippines. This would be 
cheaper than movement to the mainland, but the 
capabilities or existence of facilities was not 
known . 

5. Advise or assist in the movement of the 
planes to the west coast, which would be expen- 
sive in terms of movement and rehabilitation 
but provide a better place to market the 
planes. The Agency had four basic interests 

to serve. These were: 

a. to deprive the ChiComs of the 

b. to insure that they were not used 
to set up competition with CAT; 


c. to obtain planes for the American 

d. to obtain the kudos in the Far East 
which would result from the aircraft being 
evacuated under the American flag. 

6. It was recommended that the Agency make 

a contract with CATI in which the Agency would be 

given the right to dispose of the aircraft in 

return for financing the removal and repair. The 

first proceeds of the sale would go to reimburse 

the Agency for their expenses. Next, payment 

would be made of the notes of the Chinese 

Nationalists, and the balance divided between 


the Agency and CATI on a 50-50 basis. 

In a summary written immediately after the above 
memorandum, the IG summarized the assets involved as 
follows: CATC assets include 5 Convairs, 18 C-46's 

and 17 C-47’s, 6 or 7 of which may have been 
sabotaged. In the CNAC suit, which will be heard 
later,' involved are 5 DC-4's, 1 PBY, 25 C-47’s and 
C-46's. Spare parts of a value ranging somewhere 
between $100,000 to $300,000. It was estimated that'' 
after rehabilitation of all the aircraft and with 

\ 122 

S E C\E T 

spare parts involved, the total market value would be 
approximately $5,000,000. Outstanding against the 
title held by CATI are $4,750,000 non-interest bear- 
ing bearer notes owned by the Minister of Communications 

of the ChiNat Government which could probably be settled 


for an estimated $3,000,000. 

On 28 July 1952, the same date as the favorable 
decision by the Privy Council, the DCI was advised that 
the objectivs of the Agency were to insure that the air- 
craft did not enter into any position competitive with 
CAT, and to insure that either through the sale or re- 
sale they would not eventually reach Communist hands; 
also, to insure that CAT was not subject to reprisals 
by the ChiNat Government if CATI in any way failed to 
live up to its contractual obligations. 

(N.B. The ChiNat Government consistently refused to 
accept the fact that there were any real differences be- 
tween CAT and CATI; this, of course, was based on the 
fact that Chennault and Willauer were the principal 
persons in the Far East involved in both the corporations. 

Denial of these assets to the ChiComs should be ex- 
ploited as fully as possible from a psych-war viewpoint. 

It was concluded that in view of the Agency's NSC 
10/2 responsibilities and of any possible impact on 
CAT a close continuing Agency interest was required 


as to the disposition of the assets and could only be 
insured if the U.S. Government exercised full control 
over such disposition. This could best be achieved by 
underwriting the evacuation and rehabilitation costs, 
and only CIA was in a position to enter into the 
necessary contractual arrangements with CATI to accom- 
plish the above. It was recommended that CIA assume 
complete responsibility on behalf of the U.S. Govern- 
ment in this matter, and that a project be prepared 
which would authorize expenditure up to $3,000,000 for 
accomplishment of the U.S. objectives. The project 
should be written to provide the maximum exemption 
and/or flexibility from all Agency regulations and 
procedures. Full authority for the implementation of 

the project should be placed on a single individual 


acting for and in the name of the Director. — 

On 30 July 1952 the IG wrote a memorandum for 


the record which stated: — 

"Mr. Corcoran made a deal with Sir 
'Oliver Littleton, Colonial Secretary, 
under which Mr. Corcoran agreed not to 
take the planes directly to Formosa and * 

Sir Oliver agreed: 

a. to guarantee protection to the planes 


S E 

E T 

b. to g-uarantee to make possible the 
repairing- of the planes in place; 

c . to see that the Order in Council 

is broad enough to cover everything, includ- 
ing the parts off the premises; 

d. to supplement the order so that by 
Executive Order CATI has the other assets; 

e. agree to play ball if they elect 
not to make the repairs in place." 

Although the above appeared to be quite a favor- 
able agreement reached with the Colonial Secretary, 

Mr. Corcoran was of the firm opinion that the single 
provision that the planes could not proceed directly 
to Formosa greatly increased the cost of the evacua- 
tion and rehabilitation of the aircraft. He was con- 
vinced that this single provision was the result of 
strong pressures by British interests in Hong Kong, 
particularly by the Keswick Brothers of the Jardine 
and Mattheson Company, and by Butterfield and Swire. 

He stated that they wanted to force CATI into a 
position where they would have to use JAMCO in HOng" 
Kong to rehabilitate the planes or else to sell the 
aircraft to the British interests, who would then 

rehabilitate them at JAMCO and place them on the 
market. This would undoubtedly result in their even- 

6 ] 

tually falling into the hands of the Chinese Communists. — 
Unofficially, the reasoning given by the British 
for the restriction against any direct movement of the 
aircraft to Taiwan was that such a move would greatly 
damage, if not destroy, the juridical base on which the 
Privy Council had upheld the CATI appeal. This was that 
there had been a valid and legitimate sale by J 'V,' Chinese 
Nationalist Government, recognized by Great Britain at 
the time of sale, to American business interests. Any 
direct movement of the assets to Taiwan would lead to 
charges that the entire transaction had merely been a 
device by which the ChiNat Government sought to retain 
their ownership. (It is not inconceivable that if the 
aircraft had been moved to Taiwan, the ChiNat Govern- 
ment might have taken some action based on the notes 
given , to them by CATI, which might have confirmed the 
suspicions as to the legitimacy of the sale.) 

immediately following the favorable decision of 
the Privy Council there was a series of meetings 
between representatives of the Department of State, " 
Department of Defense (principally the Navy) , and 
the Agency with regard to how the evacuation and 




disposition of the aircraft and spare parts should be 
handled. A Presidential Directive had been received 
authorizing a transport aircraft carrier , (TCVE) to 
proceed to Hong Kong to pick up the more valuable of 
the aircraft. 

There was a considerable amount of indecision as 
to what action to take, since in addition to picking 
up the CATC Convairs, it was considered desirable to 
pick up the CNAC DC-4's. However, since as yet no 
decision had been made by the courts with regard to 
the CNAC assets, it was considered that rather than 
delay (particularly because of the British authorities' 
urgent desire for the evacuation to be accomplished as 
soon as possible), that the Presidential decision be 
altered so as to permit the TCVE to pick up the 
Convairs and then as many of the other CATC assets as 
it could accommodate. 

There are many memoranda involved during this 
period, with no one clear-cut memo giving the actual 
finai decision. However, a TCVE did come to Hong 
Kong and picked up the Convairs and as much of the 
other CATC assets as it could accommodate. The 'Hong 
Kong court rather quickly upheld the CATI appeal in 
the CNAC case, and a second carrier came to Hong Kong 




to pick up the DC-4's and other planes and material. 

At the prodding of the Hong Kong Government, the 
remaining planes and other movable assets were loaded 
into seagoing barges, which were towed to the U.S. 
Naval Base at Sangley Point in the Philippines and 
then reshipped to the States by commercial sea trans- 
port for rehabilitation, quite costly to CATI . 

Fortunately, from the viewpoint of CAT management 
in the field, the evacuation of all the assets of CNAC 
and CATC was accomplished in a relatively short time 
and to the satisfaction of the Hong Kong authorities. 

There is no doubt that the successful litigation 
pursued by CATI resulted in a considerable victory in 
terms of the U.S. national interest. Mr. Corcoran and 
his associates took great pride in the accomplishment 
although they recognized that it could not have been 
done without the assistance, financially and polit- 
ically, of the Agency and other offices of the U.S. 
Government. Unfortunately, it was a victory that ■ 
left a bitter taste in the mouth of CIA, CATI,. and 
to a certain extent CAT because of many conflicts "" 
of interest and areas of differences that arose 


during the course of the long drawn-out litigation.* 

♦Hindsight is, of course, always better than fore- 
sight, but Cox felt strongly in November 1949 and 
since that NSC 10 provided OPC with sufficient 
authority to undertake the proposed denial oper- 
. ation. As events turned out, OPC, and later the 
DD/P, was required to advance funds, exert pres- 
sures, and in many ways to undertake things all in 
the national interest but for the financial benefit 
of CATI and without any real control of CATI’s 
actions. As indicated some of these actions created 
very serious problems for CAT, The deterioration of 
relationships between the old and new owners of CAT 
was unfortunate and regrettable. 



1. Paper, "History of Civil Air Transport 
(CAT)" by Mr. Gates Lloyd, March 1964, 
HS/CSG 1848 

2. Article, "Chai Hui ! Hao Whitey," CAT 
Bulletin, March 1954, p. 4. 

3. Volume IV, Section IE, attachment to 
"Report of Visit to Princeton University," 
Box II, Items 3 and 6, HS/CSG 900, 

28 November 1966 . 

4. Article, "How CAT Really Got Going," by 
Whiting Willauer, CAT Bulletin, 

February 1952, p. 1. 

5. See reference number 3. 

6. Article, "Brief Outline of CAT History" 

CAT Bulletin, February 1953, p. 1. 

7. Article, CAT Bulletin, February 1953, p. 2. 

8. See reference 3, item 6. 

9. Draft History of OPC Operations in China 

from the beginni ng in 1949 to the 

initiation of f , — _I_J 

Section 2, p. 1,1 ' 

8 December 1950, HS/CSG 276. 

10. U.S. Relations with China, Washington 1949, 

p. 336 (Footnote taken fromH 
History, HS/CSG 276.) 


11. See reference 10, pp. 282-283, pp. 336-338. 

12. NSC 34/2, Report to NSC by Secretary of 
State, Subject: U.S. Policy Toward 

China, 28 February 1949, TS-23162. 


E T 


13. Memo from ADPC to State/PP (Joyce) 

Subject: Policy Direction in China, 

Implementation of NSC 34/2, 8 March 
1949, TS-30975 . 

14. Memo from State/PP (George H. Butler) 

Subject: Interpretation of NSC 34/2, 

23 March 1949, TS-29384 . 

15. Telegram 777, Ambassador Stuart, Nanking 

to Secretary of State, 16 April 1949, 
Subject: Approach by Ma Hung-kuei, 

TS-6063 . 

16. Telegram 233, Minister Clark, Canton, 
to Secretary of State, 19 April 1949, 
Subject: Comment on Ambassador Stuart’s 

Telegram Regarding Ma Hung-kuei, 



;e for F ile (no addressee), signed by 

I'lUI-C A 1/ 

18 . Memo of Convi 
C . L . Chennai 
10 May 1949 , 

srsation with Major General 
alt, USA (ret.) unsigned, 



Memo from John Davies, Jr. 
Su bject: Subsidy of CAT 

for Offie 

8 July 1949, TS-54945. 

20. Memo for File by Mr. Paul Helliwell, 

Subject: Conference in Department of 

State, 2 September 1949, dated 

3 September 1949. 

21. Memo from ADPC to Mr. Frank, Subject: 
Possible OPC Operations in Support of 
Anti-Communist Elements in China, 

6 September 1949, TS-31596. 





Memo from 


_C0P, Subject 

Findings and Recommendat: 
Malcolm Rosholt 


10 September 

1949, TS-31681. 


Memo from 


_COP, Subject 
j Specific, 

Report on Northwest China Mineral 
Deposits, September 1949, TS-31716. 

24. Memo to George F. Kennan, Counselor 
Department of State from ADPC, Subject: 
Covert Operations in China, 27 September 
1949, TS-31796 . 

25. Memo for F.G. Wisner, ADCP/CIA, from G.F. 

Kennan, Subject: Covert Operations in 

China, 3 October 1949, TS-31901. 

dsveloned bv 


7 October 

1949, approved by Frank G. Wisner, ADPC, 
12 October 1949, TS-31918 . 

27. Termination) __ 

authorized bv F.G. Wisner, 10 April 1950, 

28. Resum6 of Conversation between Generalissimo 
Chiang Kai-shek and General C.L. Chennault 
regarding private aid for resistance to 
Communism in China; conversation occurred 

16 October 1949 by Chennault, undated, 
pouched to Headqu arters from Hong Kong, 
passed H) b o OPC 30 November 1949. 

29 . Report on confe rence betwee n Pai Chung-hsi 

and Cox-Rosholt 

held Kweilin 

15 October 1949. File 65-6 


30, See Footnote at bottom of page 32. 

31. See Footnote at bottom of page 35. 


32. Progress Report Number 1, to OPC from 
Alfred T. Cox, 26 October 1949, TS-35270. 

33. Letter from General Pai Chung-hsi to 
Ge neral C.L. Chennault, 14 December 1 9 49, 

34. Letter from Chen Chi-t an g to Chennault . 
14 December 1949. f 

35. Memo for Kermit Roosevelt and Frank Lindsay 
from F.G. Wisner, Subject: Comments of 

State and Defense Departments Representatives 
on Status Report on China Operations, 

25 November 1949, TS-35541. 

36. Memo for ADP C from C'PP, Sub ject; 


21 December 1949, TS-35750. 

pass to Cox, 30 December 1949, 


38. Memo from Wisner to Messrs. Frank, Lindsay 
and Offie, Subject: Policy Guidance on 

OPC Operations in China, 19 December 1949, 
TS-35688 . 

39. Memo from G.F. Kennan t o F.G . Wisner 

t Subject: 

Covert Operations in China, presumably 
dated 30 December 1949, TS-35850. 

41. Letter of Instructi ons from ADPC I 
to Cox 3 October 1941T, 

TS-3 187*5 . 


42. Memo for A.T . Cox' from ADPC 

1 i Subject; Supplementary 

Letter of Instructions , 10 March 1950, 
TS-38614 . 

Card Notation 



Memo, no addressee,. 


2 1/2 Year Summary, 

3 October 1£ 



Memo for Mr, ___ 

Subject: Supplementar y Le t ter of 

Instructions to Cox | 

7 March 1950, TS-38533. 


Basic reference cable , _ . ^ 

to Headquarters, TS OPC, 30 October 1950. 

48. Memo for DCI from ADPC, Subject; Situation 
Report Concerning Planes . and Other Assets 1 
of CNAC and CATC in Hong Kong ; Extent of 
OPC Participation in Efforts to Prevent 
These Assets From Falling Into Communist 
Hands, 9 December 1949, ER 0-7909. 

49. Privy Council Appeal No. 15 of 1952; 

The Council states that such physical 
possession of the assets since it was 
illegal under the terms of the Order in 
Council could not be considered to have 
given the Chinese Communists any legal 
rights because of such possession. 

50. See reference number 48. 

51. Memo CATI Assets in Possession and 
Control of CAT, Inc., 16 December 1951, 
unsigned . 


s K» Et 

S E C\fi E T 

52. Memo for the Record, Subject: Meeting 

14 May with J .J. Brenn an, Whit ing 

Willauer ,1 

signed bv l I . i 

OPC Registry _ _ . 

53. Memo for Record, Subject: Purchase of 

Aircraft Parts, Engines, and other 
Eq uipme nt ( with draft agreement attached) 

by Special Assistant 

for Inspection OPC, 30 November 1951. 

54. Memo for Record by ! 1 

Subject: Meeting on Purchase of Aircraft 

Parts, Engines and other Equipment from 
Civil Air Transport, Inc. by CAT, Inc., 

7 December 1951, TS-67726 . 

55. Memo for the Record, Subject: Conversa - 
ti on with Th omas Corcoran byi j 

f 1 7 Febr uary 1951, OPC 

Registry L T 

56. Memo for DD/P from General Counsel, 

Subject: Appeal of the Hong Kong Airplane 

Cases, 28 January 1952, TS-58412. 

57. Memo for the Record, Subject: CATI 

Claims on Hong Kong by Stuart Hedden, 

IG, 3 July 1952, TS-63795. 

58. Memo for the Record, Subject: CATI Law- 

suit by Stuart Hedden, 14 July 1952, 

TS, no Registry number given. 

59. Memo for DCI from DC/EE, Subject: 

Aircraft in Hong Kong, 28 July 1952, 

60. Memo for the Record by Stuart Hedden, 

Subject: CATI Planes, 30 July 1952. 

61. See Report of Interview with Thomas G.’ 
Corcoran, Volume IV, Section IV of 
this History.